Hurricane Isaias makes landfall near Destin with more than 70% of Gulf oil already shut in

Hurricane Isaias made landfall near Destin, Florida, around 9:30 p.m. Eastern time on Friday as a Category 2 storm, the National Hurricane Center said, with sustained winds of 105 mph. It had been a Category 3 that morning, with winds of 120 mph.

Companies had already shut in more than 70% of the crude produced in the U.S. Gulf of Mexico. Shut in means the wells were closed and production stopped, a precaution rather than a count of oil destroyed. Friday's oil prices and the shut-in count were set before the center came ashore.

Ed Hirs, an energy fellow at the University of Houston, told Houston Public Media on Friday that the storm was headed east of the Texas-Louisiana refining coast.

"Isaias is remaining stronger than originally projected but its track is more east," Gary Cunningham of Tradition Energy told Bloomberg.

That shift, he said, limited the expected hit to Gulf production and to plants that export liquefied natural gas, compared with earlier forecasts. The landfall at Destin, east of that refining coast, left the precaution in place and the open fuel risk onshore.

Operators told the Marine Minerals Administration, the Interior Department office that tracks offshore production, that 1.46 million barrels a day were shut in as of noon Eastern time on Friday. That was 71.51% of current Gulf oil production, up from 25.08% in Wednesday's survey. The agency said facilities would be inspected after the storm, and that production at undamaged sites would resume "immediately" once standard checks were done. Damaged facilities, it said, may take longer. It gave no restart date.

The open risk for fuel prices is onshore, in the refineries that turn crude into gasoline and diesel. Andrew Lipow of Lipow Oil Associates said Friday that Chevron's Pascagoula refinery in Mississippi and Vertex Energy's refinery near Mobile, Alabama, together about 2.4% of U.S. refining capacity, were at risk of flooding and power loss. Bloomberg reported that Pascagoula can process 356,000 barrels a day.

Chevron spokesperson Ross Allen told CNBC on Thursday that Pascagoula was still running. Gulf Coast refineries were already running at 95% of capacity, Lipow said in a Friday note, leaving no slack to replace lost fuel.

Brent settled Friday at $104.72 a barrel, up 44 cents, or 0.42%. Settled means the closing price of that day's futures trading. West Texas Intermediate, the main U.S. grade, settled at $91.85, up 36 cents, or 0.39%. Reuters tied the gain to the approaching hurricane and to companies shutting more than 70% of Gulf crude.

The gain was small beside Thursday. Brent rose 4.1% that day and West Texas Intermediate rose 3.6%, which Reuters attributed to the Iran conflict and to shut-ins that were still building. China's plan to resume refined-fuel exports after its Golden Week holiday, the country's early-October break, weighed on Friday's prices, Reuters reported, citing sources.

On Thursday, President Donald Trump said talks with Iran were productive and that no attack was planned before the midterm elections on Tuesday, November 3, Reuters reported. Tamas Varga of PVM Oil Associates said that pledge, and China's export plan, were pushing prices the other way.

The United States Oil Fund BUSO, which holds West Texas Intermediate futures rather than Gulf crude, rose 0.42% to $148.20. That matched Brent's percentage by coincidence. The U.S. crude the fund holds rose 0.39%.

On Monday, Saudi Aramco chief executive Amin Nasser told CNBC that nearly 3 billion barrels of supply had been lost since the United States and Israel began strikes on Iran in late February, while about 1 billion barrels had been drawn from stocks. The larger figure is oil that did not arrive. The smaller one is what storage covered. That lost supply is why Brent is above $100.

"The system is already straining," he said.

Replenishing inventories while meeting demand, he said, could take up to two years.

The inspections will show whether the wells can restart. For fuel prices, the exposure this landfall left open is Pascagoula and the plant near Mobile.