Hurricane sends oil prices higher

Hurricane Ivan has already wreaked havoc in Grenada

Oil prices have risen on fears that Hurricane Ivan will disrupt petroleum supplies from the Gulf of Mexico.

A barrel of New York light crude rose $1.27 to $44.08. In London, Brent crude added $1.03 to $41.23.

Oil companies, including Shell, have started evacuating workers from the Gulf of Mexico, which is home to about one-quarter of US oil and gas output.

The Caribbean is a crucial zone for oil transportation, as crude is drawn up into the US from South America.

Volatile

The hurricane comes at a time of persistently high oil prices; traders have been worried by the threat of supply disruptions in Russia and Iraq.

Prices had, however, been falling back from the record highs seen last month, when the price of US light crude in New York reached almost $50.

Oil - and petrol - prices have been rising steadily

Uncertainty about the exact path of Hurricane Ivan is likely to add to oil market volatility.

The centre of the hurricane is expected to reach the western tip of Cuba later on Monday.

Most of the oil platforms in the Gulf of Mexico are off the Louisiana and Texas coasts, about 700 miles northwest of western Cuba.

Meanwhile, officials say the Cayman Islands have suffered enormous damage.

Governor Bruce Dinwiddy said thousands of homes had lost their roofs and key government buildings had been hit.

Eye of the storm

On Sunday, UK oil giant Shell said it had shut offshore production wells in the eastern Gulf of Mexico and was evacuating 750 workers from the eastern and central Gulf.

The firm also has shut off 270,000 barrels per day of oil production, more than three times that amount that affected by the previous hurricanes Bonnie and Charley.

Shell also said it has trimmed gas production.

BP, ChevronTexaco and Kerr McGee also are reported to have evacuated non-essential workers.

Hurricane Ivan could "defer tanker unloading and temporarily shut down oil rigs, that is the risk", said Dariuz Kowalczyk, senior investment strategist at CFC Securities in Hong Kong.

Other analysts doubt that oil supply will actually be disrupted but say that in the current sensitive oil market, fears of disruption are enough to buoy prices.

Separately, ministers from the Organisation of Petroleum Exporting Countries (OPEC), which accounts for 40% of the world's output, meet in Vienna this week to consider increasing output.