* Gustav weakens to Category 1 after it hits Louisiana
* U.S. Gulf offshore oil output and 10 refineries shut
* Iran says $100 a barrel lowest acceptable price
(Adds details)
By Matthew Robinson
LONDON, Sept 1 (Reuters) - Oil plunged more than $4 on
Monday as concerns that Hurricane Gustav would cause lasting
damage to the U.S. oil sector eased after the storm weakened
before hitting the Louisiana coast.
Gustav -- which forced more than a quarter of the United
States' refining capacity to shut down or cut processing rates
-- weakened to a Category 1 storm after roaring ashore near Port
Fourchon, Louisiana, a key logistical port that supports 75
percent of Gulf of Mexico drilling operations.
For a graph on the projected path of Gustav, please see:
https://customers.reuters.com/d/graphics/STRM_GUSTAVU2.gif
U.S. crude <CLc1> fell $4.24 in electronic trading to
$111.22 a barrel by 2120 GMT as markets discounted the potential
damage from the storm, which had earlier been forecast to hit
the United States as a Category 4 storm.
London Brent crude <LCOV8> settled down $4.64 at $109.41 a
barrel.
"It looks like Gustav is not going to be as strong a storm
as the market had feared," said Phil Flynn of Alaron Trading in
Chicago. "There is a belief that this storm is not going to do
much damage, that we are going to be able to get through this
and not miss a beat and continue our downward move."
All of the 1.3 million barrels per day of oil production
capacity in the U.S. Gulf of Mexico was shut as of Monday
morning, according to the U.S. government, though production
could restart quickly if facilities are undamaged.
"It's going to be a couple of days for checks at any of the
production facilities," Chevron spokesman Mickey Driver said.
The Louisiana Offshore Oil Port, the only U.S. port capable
of offloading the biggest oil tankers, also halted all
operations due to high winds and waves.
Gustav is the biggest threat to the region -- home to a
quarter of U.S. oil output and 15 percent of natural gas output
-- since hurricanes Katrina and Rita wrecked more than 100
offshore oil platforms in 2005 and closed several large
refineries for months.
Oil prices have tumbled from record highs above $147 a
barrel struck in July as high fuel prices and wider economic
problems hit demand in the United States and Europe.
OPEC, RUSSIA
Iran has insisted that oil markets are oversupplied, and the
OPEC nation's oil minister said Sunday that $100 a barrel was
the lowest acceptable price for crude.
OPEC meets in Vienna on Sept. 9 to discuss output policy,
but other member nations have backed Iran so far. Venezuela and
Ecuador said on Friday they expect the oil exporters' group to
maintain current output levels.
The group increased oil supply for a fourth consecutive
month in August, mainly due to higher output from Iran and
smaller hikes from Nigeria and Angola, a Reuters survey showed.
Traders are also eyeing tensions between Russia and the
West, after Kremlin leader Dmitry Medvedev said Sunday that
Russia does not want a confrontation with the West but will hit
back if attacked.
The European Union will warn Russia on Monday that Moscow's
future ties with the bloc could depend on its adhering fully to
a peace deal to end the Georgia conflict, according to a draft
statement obtained by Reuters at a summit in Brussels.
(Additional reporting by Fayen Wong in Perth, Robert Campbell
and Richard Valdmanis in New York, editing by Matthew Lewis)
