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Even as the U.S. is recovering from the flooding and devastation caused by the powerful Hurricane Harvey, an even bigger storm is brewing in the Atlantic Ocean. The potentially catastrophic Hurricane Irma has been accorded a rare Category 5 status -- the highest possible designation for a hurricane. It is already battering the Caribbean with extreme rain and winds and is set to strike Florida sometime Sunday after moving through Puerto Rico, the Dominican Republic and Haiti. One of the strongest Atlantic storms on record, Irma is likely to be worse than Harvey.

Harvey’s Impact on Energy Prices

As Hurricane Harvey tore through the Texas Gulf Coast, workers in the U.S. oil industry struggled to evacuate production facilities and shut down refineries. This, in turn, triggered the biggest disruption in nationwide energy supplies in years.

The United States has major refining infrastructures along the Gulf of Mexico (“GoM”). According to the EIA, more than 45% of domestic oil refining capacity are located in the GoM.

With deluge and floods in the aftermath of Harvey knocking out a major chunk of domestic refining capacity, crude demand was significantly curbed. This led to lower oil prices.

However, in terms of price action, gasoline was the market mover. The most widely used petroleum product ended more than 13% higher last week to $1.748 a gallon in the aftermath of Harvey knocking out refining operations in the Houston area. Harvey caused weeks of disruptions at facilities in its path -- shutting units, sparking fires and creating supply shortage possibly extending for months.

Oil, Gasoline Limp Back to Normalcy

Production and refining infrastructure that was shut down in the wake of Hurricane Harvey is starting to come back online.

While Saudi-owned Port Arthur refinery – America’s largest – is on its way up and should be partly operational by early next week, other refining giants like Valero Energy Corp. (VLO - Free Report) and ExxonMobil Corp. (XOM - Free Report) are also making progress in restarting their units. In fact, eight facilities constituting more than 11% of domestic refining capacity are beginning procedures to restart, a process that has boosted demand for crude and catapulted the commodity to four-week highs. Meanwhile, with refining capacity starting to ramp up, gasoline futures are sliding.  

Oil producers along the Gulf of Mexico and Eagle Ford shale also continue to claw back to pre-Harvey levels amid inspections and damage assessments. Companies including ConocoPhillips (COP - Free Report) , Devon Energy Corp. and EOG Resources Inc. have all resumed drilling operations and hopes to bring major portion of their affected production online soon.

Irma Unlikely to Cause Major Energy Upheaval in the U.S.

Compared to Harvey, the effects of Irma on the energy sector is expected to be much lighter. This is because Florida hardly has any critical supply-side assets – downstream or upstream – and therefore the U.S. refining capacity and production will be barely hit. With virtually no impact on supply, the only casualty is likely to be oil demand in the U.S. Southeast, that too for a limited period.

However, certain traders believe that the superstorm – ranked in the top five most powerful Atlantic hurricanes in the last 80 years and coming just after Harvey – could take out a major domestic demand center leading to renewed fuel shortages.

Some Caribbean Facilities at Risk

While most of the U.S. energy industry will remain unscathed, some facilities in the storm’s immediate path stands to be affected by Irma.   

Midstream operator Buckeye Partners L.P.’s (BPL - Free Report) petroleum products storage terminal in Bahamas – the largest such facility in the Western Hemisphere with a capacity of 26 million barrels – is set to be affected by Irma. Houston-based Buckeye Partners is also the operator of marine terminals close to Miami, Tampa, and Jacksonville, FL., with all of them likely to take minor hits. The Zacks Rank #5 (Strong Sell) partnership’s Yabucoa oil terminal in Puerto Rico is likely to get impacted as well. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

If forecast models hold true, U.S. companies such as Chevron Corp. (CVX - Free Report) , ExxonMobil Corp., Marathon Petroleum Corp. (MPC - Free Report) and Targa Resources Inc. (TRGP - Free Report) could face minor operational hiccups. These firms operate terminals or pipelines in Florida’s Port Everglades petroleum storage hub.

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