The Gulf of Mexico accounts for a quarter of US oil production

With Hurricane Gustav on course to hit the US Gulf of Mexico coast, the damage it does to the region's oil facilities could be a "worst case scenario".

The stark warning comes from extreme weather impact analyst Jim Roullier, who says Gustav may be more damaging than 2005's Hurricane Katrina.

Output from oil rigs in the US Gulf has already been cut by three-quarters, as staff continue to be evacuated.

The region produces 25% of the US's crude oil and 15% of its natural gas.

About 4,000 offshore oil and gas facilities are located in the US gulf, 100 of which were badly damaged three years ago by Katrina and the follow on Hurricane Rita.

UK oil giants BP and Shell said on Sunday that all of their Gulf of Mexico facilities were being shut down.

"This storm will be more dangerous than Katrina," said Mr Roullier, of Planalytics.

"I think this storm will prove to be a worst case scenario for the production region."

Impact on prices

Forecasters predict that Gustav will hit the central Louisiana coast west of New Orleans by late Monday or early Tuesday.

Predicted route of Hurricane Gustav (31 August 2008)

Enlarge Map



Concern about the impact of Gustav is likely to push global oil prices higher when trading resumes on Monday.

Crude prices had increased last week as concern mounted about Gustav, before finishing slightly down on Friday.

US light sweet ended Friday 13 cents lower to $115.46 a barrel, while London's Brent closed down 12 cents to $114.05.

However, it is important to remember that global demand for oil has eased since record highs of more than $147 a barrel were hit back in July.

The mayor of New Orleans, Ray Nagin, has already ordered the evacuation of the city.

In 2005, three-quarters of the city was flooded by Katrina after a storm surge breached its protective levees.

More than 1,800 people died in coastal areas.



