Hurricane Irma Worsens Latin America's Fuel Supply Crunch

Hurricane Irma Worsens Latin America's Fuel Supply Crunch
Monster Hurricane Irma has shut down oil terminals across the northern Caribbean, worsening a fuel supply crunch in Latin America.

Reuters

HOUSTON, Sept 7 (Reuters) - Monster Hurricane Irma has shut down oil terminals across the northern Caribbean, worsening a fuel supply crunch in Latin America which is struggling to meet demand since Hurricane Harvey disrupted shipments from the U.S. Gulf Coast last month.

Latin America had been scrambling for almost two weeks to find cargoes because of Harvey, which caused massive flooding in Texas and Louisiana, shutting down oil ports, refineries and production platforms.

Irma, which is being followed by hurricanes in the Atlantic and Gulf of Mexico, is threatening Caribbean refineries, terminals and storage facilities.

The U.S. National Hurricane Center said Irma is the strongest hurricane ever recorded in the Atlantic Ocean and one of the five most forceful storms to hit the Atlantic basin in 82 years.

More than 100 million barrels of storage is available in the Caribbean, which is crucial for those nations because of limited ability to refine crude, and also as supply for South American nations including Brazil, Venezuela and Colombia.

Several oil trading firms had moved a portion of their U.S. fuel inventories to the Caribbean ahead of Harvey so they could keep selling cargoes to Latin America, traders from two companies told Reuters.

Those barrels are locked in terminals in St. Eustatius, Puerto Rico and the U.S. Virgin Islands, as Irma, a Category 5 storm with winds of 185 mph (295 kph), was expected to hammer the region for several more days as it moves west-northwest.

"Irma is arriving at a bad moment. Not all oil storage facilities in the Caribbean have closed, but vessel traffic is difficult in the middle of the storm. It will get worse before getting any better," said a trader from an oil firm that rents tanks in St. Croix.

U.S.-based Buckeye Partners, the largest owner of oil storage facilities in the Caribbean, with 41.1 million barrels of capacity, said on Wednesday it shut its Yabucoa terminal in Puerto Rico.

On Thursday, it will close Borco, its largest terminal in the Bahamas that can store up to 26 million barrels of oil and other products, by the end of the day, a source familiar with terminal operations said.

NuStar Energy on Tuesday closed its 13-million-barrel Statia terminal on the small island of St. Eustatius.

Firms leasing tanks in closed terminals in St. Eustatius, St. Croix and Puerto Rico include traders Vitol, Glencore, Novum Energy and Freepoint Commodities, and Venezuela's state-run PDVSA, China's Sinopec and Russia's Rosneft, according to the sources and Reuters vessel data.

As traders worry about Irma's impact on inventories, others see longer-term potential consequences from this or other storms, as both Jose, now in the Atlantic Ocean, and Katia, off Mexico's coast, strengthened to hurricanes on Wednesday.

"If a hurricane with Irma's intensity strikes a terminal tank farm, the force of the storm at the eye wall will have destructive impact on the storage tanks, which are typically not designed to withstand those forces," said Ernie Barsamian, chief executive officer of the Tank Tiger, a terminal storage clearinghouse.


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