Most of the analysis agree it is too early to say with certainty what damage Hurricane Harvey did when it hit the Gulf of Mexico coast, and what the longer-term effects of the downgraded tropical storm will be. The rainfall could be just as damaging as the violent winds of a hurricane to the Texas energy industry.
But one thing is clear: In the new dynamic of the global oil industry, in the shale era, many of the old certainties have been blown out of the window.
US hurricanes of old were disrupters of crude oil output and supply, so invariably led to a jump in the oil price. But that was before shale when Gulf of Mexico crude comprised as much as 30 percent of the total American output.
Now it is around half that, and oil prices reflected that shift in supply. After an initial jump when it became clear Harvey was heading for US oil country, global prices of crude have fallen back. Brent was down again yesterday, and West Texas Intermediate (WTI) crude was back almost exactly where it was before the big wind blew.
That does not mean there will be no effect on petroleum prices, however. The main damage done in Texas has been to refineries, and some of the biggest in the world were closed down before the onslaught, or badly enough damaged by flooding to halt operations since. At least 10 refineries have closed down in the past few days, with the giant Exxon Mobil plant at Baytown suffering significant flood damage.
Even the Motiva refinery, owned by Saudi Aramco, could be affected. Initially, it was thought that the plant has escaped the worst of the rainfall, but reports indicated that a closure of some of its operations was under consideration as the water levels rose.
So however long the rain lasts in the southwestern US, it does not look as though the government will have to dip into the 680 million barrels it keeps on hand for emergencies in the strategic petroleum reserve.
US hurricanes of old were disrupters of crude oil output and supply, so invariably led to a jump in the oil price. But that was before shale.
If refining capacity is affected for any serious length of time, it could have the bizarre consequence of pump prices moving in the opposite direction to crude prices, at least in the US.
The other reason crude prices failed to tick up is that US stocks are historically high. The International Energy Agency (IEA) said that both crude and oil products are well above their five-year average. In this scenario, with crude stock accumulating as it cannot be refined into petrol, there is even less impetus to buy on global markets.
The big question is what effect Harvey will have on shale production in the US. Most American shale is concentrated further north or east, out of the storm’s path, but the big Texas shale field at Eagle Ford was closed when it was apparent it was in the storm’s path. On Monday, certain operators said they were going to resume production in some areas. Much depends on levels of rainfall in the next 48 hours.
What does all this mean for Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC)? There was some speculation at the weekend when the hurricane was forecast to wreak unprecedented damage, that Harvey might do for OPEC what the organization has failed to do itself over months of production limits: Bring about a sustained uplift in crude oil prices.
That does not look likely anymore. The new economics of the global energy business means that it will take a stronger force even than a Gulf of Mexico hurricane to begin inflating the oil price once more.