Crude oil soared to a record above $70 a barrel in New York after Hurricane Katrina forced companies including Exxon Mobil Corp. and Chevron Corp. to evacuate rigs in the Gulf of Mexico, where 30 percent of U.S. oil is produced.
Oil had its biggest gain in 29 months as Katrina, the U.S. Gulf coast's worst storm since 1969, disrupted production and headed for refineries that make as much as 15 percent of the nation's fuel. Hurricane Ivan last September cut the region's oil output by as much as a third.
``Damage similar to that caused by Ivan will push oil prices above $75,'' said A.F. Alhajji, an energy economist and associate professor of economics at Ohio Northern University. ``It took more than six months to restore production after Hurricane Ivan. Crude oil prices increased by more than $10 within a month.''
Crude oil for October delivery rose as much as $4.67, or 7.1 percent, to $70.80 a barrel in electronic after-hours trading on the New York Mercantile Exchange. The commodity retreated to $69.15 at 11:25 a.m. in London after the storm's strength was downgraded. Natural gas, heating oil and gasoline climbed to all- time highs today.
Source: Bloomberg News