* Gustav weakens to Category 1 after it hits Louisiana
* U.S. Gulf offshore oil output and 13 refineries shut
* Iran says $100 a barrel lowest acceptable price
(Adds details, updates prices)
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 $4.06 in electronic trading to
$111.40 a barrel by 2230 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 <LCOV8>
settled down $4.64 at $109.41.
"It looks like Gustav is not going to be as strong a storm
as the market had feared," said Phil Flynn, analyst at Alaron
Trading in Chicago.
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.
On shore, some 13 oil refineries representing about 15
percent of the nation's fuel production capacity were shut,
according to company officials, trade sources and a report from
the U.S. Department of Energy. Another 10 refineries reduced
production rates due to the hurricane.
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.
Experts said operations could resume quickly if facilities
make it through the hurricane without significant damage, but
the extent of the damage will not be known for days.
"It's going to be a couple of days for checks at any of the
(offshore) production facilities," Chevron spokesman Mickey
Driver said.
The U.S. government has said it is ready to release crude
from the nation's emergency stockpile if Gustav triggers a
prolonged disruption to supply.
Gustav is the biggest threat to the region -- home to a
quarter of U.S. oil output and more than a third of U.S.
refining capacity -- since hurricanes Katrina and Rita wrecked
more than 100 offshore oil platforms in 2005 and closed several
large refineries for months.
OPEC MEETING LOOMS
Oil's losses on Monday extended a slide 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 member Iran has insisted that oil markets are
oversupplied, and the nation's oil minister said on 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.
(Additional reporting by Fayen Wong in Perth, Robert Campbell
and Richard Valdmanis in New York, editing by Matthew Lewis)
