Royal Dutch Shell has warned over a hit of around 400 million US dollars (£294 million) from Hurricane Ida in the US Gulf of Mexico.

The oil giant said Hurricane Ida will knock its overall underlying earnings and cash flow from operations in the third quarter.

The storm slammed into a critical port that serves as the primary support hub for the Gulf of Mexico’s deepwater offshore oil and gas industry in the US.

This has combined with curtailed production to compound the recent spike in oil prices, with Brent crude recently surging to three-year highs above 80 US dollars a barrel.

Debris from Hurricane Ida
The impact of Hurricane Ida was felt in large parts of the US (Hunter Dawkins/The Gazebo Gazette via AP)

Shell also flagged rising global energy prices, which will see margins fluctuate significantly across its integrated gas cash flow from operations in the third quarter, but is not set to take its toll on earnings in the upstream division.

The update, which comes ahead of third quarter results on October 28, set the scene for a year dominated by rising oil prices.

Shell said that over the full year, every 10 US dollar increase in the cost of Brent crude adds around three billion US dollars (£2.2 billion) to upstream earnings and 1.1 billion US dollars (£809 million) to integrated gas earnings.

Oil prices have soared amid rocketing demand as the global economy has rebounded from the early days of the pandemic, while oil cartel Opec has increased production slowly after deep cuts made last year as the crisis struck.

Shell’s update also showed the firm is expecting production for the third quarter of between 890,000 and 950,000 barrels of equivalent oil per day.