Benchmark West Texas Intermediate crude on Wednesday jumped $3, or 3.5 percent, to $89.02 per barrel in New York. Brent crude rose $2.61, or 2.3 percent, to $115.50 in London.
The government says Tropical Storm Lee forced 131 oil platforms in the Gulf to evacuate, cutting production by 847,000 barrels per day. That's about 4 percent of the oil that the U.S. consumes every day and enough to raise concerns about world supplies.
The Libyan rebellion already has shut down about 1.5 million barrels of oil exports per day from that country. And a series of fires, oil spills and other problems in the North Sea has helped cut a few hundred thousand barrels per day this summer from an area that already was in steep decline. Analyst Stephen Schork noted that North Sea production has fallen 45 percent since April 2003.
The International Energy Agency and the Energy Information Administration warned earlier this year that production losses would create a worldwide shortage in the second half of the year. Developed nations, including the U.S. and European countries, decided in June to release 60 million barrels from emergency stockpiles to help make up the shortfall. Analysts said that may not be enough.
Traders are now watching a tropical depression in the Atlantic. It's still 3,000 miles away from the U.S., but analysts are betting it will be the next of many storms to hamper production this hurricane season.
"These storms are going to make it tough for those guys to get their rigs back up and running," PFGBest analyst Phil Weiss said.
The Bureau of Ocean Energy Management, Regulation and Enforcement, which has been tracking the impact of Tropical Storm Lee since Friday, says the storm so far has cut 4 million barrels of oil from U.S. markets. Lee dumped more than a foot of rain on New Orleans before moving inland.
Meanwhile stock markets rose Wednesday, cheered by news that Germany's role in Greece's financial bailout was approved by its highest court. The announcement helped boost stocks in the U.S. and helped support oil prices as well.
Gasoline pump prices were little changed on Wednesday at a national average of $3.657 per gallon, according to AAA, Wright Express and Oil Price Information Service. That's almost 98 cents higher than a year ago. Gasoline is near the record high for this time of year, set in 2008.
In other energy trading, heating oil rose 6 cents to $3.0682 per gallon and gasoline futures rose 7 cents to $2.8902 per gallon. Natural gas increased by 5 cents to $3.991 per 1,000 cubic feet.