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Hurricane Laura: Oil hits five-month high on fears of 'catastrophic damage'

Dark clouds stretch across a refinery as Hurricane Ike approaches the Gulf of Mexico near Houston, Texas September 12, 2008. Massive Hurricane Ike bore down on the Texas coast on Friday, driving a wall of water into seaside communities and threatening catastrophic damage. REUTERS/Carlos Barria  (UNITED STATES)
A refinery in the Gulf of Mexico as Hurricane Ike approached in 2008, as fears grow over the toll of Hurricane Laura. Photo: Carlos Barria/Reuters

Benchmark oil prices hit a five-month high on Wednesday, with the evacuation of hundreds of US offshore oil facilities ahead of Hurricane Laura sparking fears of shortages.

Coastal areas in Texas and Louisiana were bracing for hurricane-force winds and large waves on Wednesday night, with authorities warning of a “life-threatening storm surge” that could reach 30 miles inland and cause widespread flash flooding.

Oil producers evacuated 310 facilities in the Gulf of Mexico, shutting down 85% of offshore output in the ocean basin along the southeastern coast of the US, Reuters reports.

The news pushed widely traded oil futures contracts to their highest prices since early March.

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Brent crude (BZ=F) was up 0.4% to $46.05 (£35.04) a barrel at around 9am in London, while West Texas Intermediate crude was up 0.2% to $43.43 (£33.04) a barrel.

Deutsche Bank analysts wrote in a note: “Much of the oil production in the area has already been shut down, and there are obvious concerns of further damage to come.”

"Markets are currently pricing in a possible near-term catastrophic gasoline shortage," said Stephen Innes, chief global markets strategist at AxiCorp, according to Reuters.

READ MORE: European stocks flat despite optimism about US-China trade

The US National Hurricane Centre called for measures to protect life and property to be accelerated, warning of “potentially catastrophic damage” from the storm.

The US government agency said the hurricane was rapidly intensifying, and had wind speeds of up to 105 mph.