Hurricane Isaias disrupts U.S. oil production in Gulf of Mexico, threatens refineries

Hurricane Isaias is disrupting U.S. crude oil production in the Gulf of Mexico and could limit about 2% of the country's refining capacity, at a time when fuel markets are already tight around the world.

Isaias is churning toward Mississippi, Alabama and the Florida panhandle as a Category 3 storm with maximum sustained winds of 120 miles per hour, according to the National Hurricane Center, and is expected to make landfall Friday night or early Saturday.

As of Thursday, oil companies had shut in about 1.3 million barrels per day, or roughly 63% of total U.S. production in the Gulf, according to the Bureau of Safety and Environmental Enforcement.

The hurricane appeared to be veering away from the dense refining region in southern Louisiana near New Orleans and Baton Rouge.

But the storm could affect Chevron's refinery in Pascagoula, Mississippi, and a Vertex Energy refinery in Saraland, Alabama. Both areas are under hurricane warnings. The facilities there can produce a combined 466,000 bpd, or 2.4% of total U.S. refining capacity, said Andy Lipow, president of Lipow Oil Associates.

Chevron's refinery at Pascagoula remains operational, spokesperson Ross Allen said. Vertex officials weren't immediately available for comment about its Saraland refinery.

Refineries on the Gulf Coast are running at 95% of their capacity, so there is no slack in the system to make up for lost production, Lipow said.

Diesel prices have soared as the wars in Eastern Europe and the Middle East knock out refining capacity. Ukraine's strikes on Russian refineries forced Moscow to ban diesel exports. Iran and its Houthi allies have also attacked refineries in the Middle East.

U.S. refiners have stepped in to take advantage of wide profit margins to export diesel around the world, particularly to Europe.

In the past, fuel prices rose while crude prices fell during outages at Gulf refineries, said Kevin Book, managing director at ClearView Energy Partners. That's as a result of those refineries not demanding crude and not producing fuel for consumers, Book told CNBC's "Squawk Box" on Thursday.

Lipow warned that tanker traffic will also be disrupted.

"Tankers will be delayed delivering crude oil to the refineries while other tankers are delayed loading gasoline, jet fuel and diesel out of the refineries," the analyst said. "Florida will experience delays in receiving gasoline, jet fuel and diesel."