How tropical storms could impact oil prices

Oil prices have been on a rollercoaster ride recently, with investors closely watching the potential impact of tropical storms on the market. After Hurricane Harvey devastated about 20% of the US refining capacity, all eyes are now on the aftermath of Hurricane Irma. To shed light on the situation, Dolapo Oni, Head of Energy Research at Eko Bank, joined CNBC Africa for an in-depth discussion. When assessing the current scenario, Oni highlighted the distinction between the impacts of Harvey and Irma. He explained that while Harvey directly hit major refineries in the Gulf of Mexico, Irma's trajectory may have a less severe effect due to its southwestern direction. The precautionary shutdown of refineries during Harvey led to a temporary dip in oil prices, which quickly rebounded as facilities resumed operations. Oni emphasized that the resilience of the Gulf refineries, coupled with efficient recovery measures, limited the long-term consequences of the storm. However, the sudden spike in demand post-recovery drove prices upward, showcasing the market's sensitivity to disruptions. In the midst of these challenges, OPEC's upcoming meeting holds significance for the oil industry. Oni discussed the production status of key players like Nigeria and Libya, both of which have faced production hurdles recently. While there are calls for these countries to increase output, concerns remain about maintaining market stability. The delicate balance of light and heavy crude oil supply, compounded by the impact of hurricanes on shale production, is a key factor influencing price trends. As the hurricane season unfolds, the global oil market braces for further fluctuations. Looking ahead, compliance with production cuts and efforts to address supply-demand dynamics will be crucial topics at the upcoming OPEC meeting. Despite ongoing challenges, stakeholders remain optimistic about navigating the turbulent waters of the oil market. The resilience and adaptability of the industry, along with strategic decision-making, will play a vital role in mitigating the impact of external disruptions and steering the sector towards stability and growth.