Fears of $1bn offshore energy loss from Hurricane Ida

The rapid increase in strength of Hurricane Ida as it moved through the Gulf of Mexico could see the offshore energy sector suffer one of its biggest losses for several years as a result of the natural catastrophe.

Insured losses in the sector could hit $1bn property damage alone, according to preliminary estimates from U.S. property data and analytics company CoreLogic.

That estimate excluded any losses from production disruption, and could be revised over time, a spokesperson for CoreLogic said.

The volume of oil shut in by the hurricane rose to 1.7m bpd of offshore output, up by 240,000 barrels from Wednesday, the Bureau of Safety and Environmental Enforcement said.

Natural resources consultancy Wood Mackenzie said that Ida had a significant impact on Louisiana refinery operations and the Gulf of Mexico production, “causing a historic US crude supply chain disruption”. The consultancy added that “utility disruptions caused by lack of power, mobile data services, and water, could lead to Ida becoming a long-tailed event when it comes to claims reporting.”

There were estimates that total losses could be close to $30bn, with the impact of the hurricane continuing north as far up as New York, resulting in dozens of fatalities.

William Liebler, US Chief Claims Officer at Marsh, said that “the remnants of Hurricane Ida passing through the Northeast has caused significant water damage… We expect the bulk of those claims to come in over the next several days as businesses access and assess the impact.”