The Delta is a big, powerful storm. The natural disaster dealt the biggest blow to oil production off the coast of the U.S. Gulf of Mexico in 15 years. In fact, it stopped most of the region's oil and nearly two-thirds of its natural gas production.

Delta was carrying winds of 120 miles per hour (195 km) on Friday. The data was obtained as winds blew through major Gulf oil-producing areas toward land on the Louisiana coast at night. The area is located about 160 miles south of Cameron, Louisiana.

It is the 7 a.m. CDT update that was delivered from the U.S. National Hurricane Center. This event certainly made the oil strengthening pause. Many businesses choose to temporarily halt their production while the storm is occurring.

How Bad is this Storm?

Delta storms have closed about 1.67 million barrels per day or 92% of Gulf oil production. It is actually is the largest since 2005. At the time, Hurricane Katrina destroyed more than 100 offshore bridges and hampered production for months. The effect is obviously very bad.

Oil prices were previously on track for a rise of about 10% for the week. The situation was prompted by blackouts in the Gulf of Mexico and labor disputes in the North Sea. The combination of the two has removed the quota of 2 million barrels per day.

U.S. natural gas prices on Friday were also on track to close at record highs. It has been happening since November 2019 due to the closure. Gas futures for next month rose 11 cents or 4.3% to $2.74 per million British thermal units.

Offshore Facilities Evacuated

Workers have evacuated as many as 279 facilities off the Gulf of Mexico coast and producers have also moved 15 drilling rigs from delta wind farms. Tropical wind strength stretches up to 160 miles from the center of the event as the NHC says.

Oil prices fell in early trading on Friday at the end of the week. The drop in oil prices was driven by a strike in Norway that raised the prospect of supply from major producers. Reportedly, the existing supply will be trimmed by as much as 25%.

Brent also fell 9 cents to $43.25 a barrel. The figure comes after earlier rising more than 3% on Thursday. U.S. West Texas Intermediate (WTI) crude fell as much as 5 cents to $41.14. The increase came after a fall of more than 3% on Thursday.

Both contracts are on track for an increase of about 10% this week. The first increase occurred in three weeks due to the prospect of a tighter supply. The cause was a halt to production in the North Sea due to the actions of Norwegian oil workers.

Impact of Large Losses

Such conditions could lead to nearly a million barrels of crude oil per day being adversely affected. It was said by ANZ in a note. Norwegian oil and labor company officials said they would meet with state-appointed mediators. A lot of people may wait for this moment.

It said that the meeting would take place on Friday. Apparently, the two sides agreed to hope to end a strike that threatens to wipe out about a quarter of the country's oil and gas production. Of course, this meeting is expected by many market participants.

Elsewhere, market watchers are also bracing for an impact on U.S. Hurricane Delta production. The storm is expected to hit the Gulf Coast area in a few hours. Nearly 1.5 million barrels of daily production has been halted so far. 

Various types of equipment have also been evacuated to avoid greater losses. It is reasonable since they may unable to produce this commodity for some days further. However, some analysts believe that the condition will be under control.