Tropical storm Isaac strengthens, forecast to become hurricane and impact Gulf Coast

Our latest update on Isaac can be found here.. Tropical storm Isaac continues to make its way through the Caribbean and is currently bearing down on Haiti. Having taken a little longer than originally expected to increase in strength, Isaac has now intensified and has maximum sustained winds of 60mph. Further strengthening is forecast before Isaac strikes Haiti and then moves on to Cuba. Cuba is a large enough land mass that it might slow the storms development down somewhat but Isaac is still forecast to become a hurricane by Monday.

After crossing Cuba Isaac is currently forecast to head into the Gulf to the west of Florida. The forecast models are mostly in agreement with this track although some put Isaac tracking along the western Florida coastline. If the consensus is correct, Isaac will move into the far eastern Gulf of Mexico as a category 1 hurricane heading straight for some of the most busy oil production areas on the planet.

Oil company BP have already announced that they are shutting down both oil and gas output at their Thunder Horse Platform in the Gulf of Mexico. Workers are being evacuated from the rigs before the storm reaches the area. The area Isaac is expected to move through is dotted with many oil and gas rigs and associated pieces of industry hardware. As a result there could be cat-in-a-box type transactions in place that could be affected by the storm. It’s also possible that there will be some energy ILWs that could be exposed to Isaac if it barrels straight through the oil production area. Of course there are also a number of catastrophe bonds which have exposure to the Gulf coast and investors and sponsors will be watching Isaac with interest at this time.

Isaac is currently forecast to make landfall on the Florida panhandle towards the border with Alabama as a strong category 1 hurricane with winds of 80mph. The forecast track has been moving slowly westwards meaning that southern Florida appears to be safe for the moment. Of course a lot can happen between now and Isaac making landfall and there is a chance that the warm waters of the Gulf of Mexico could enable Isaac to intensify further. There is also a chance that interaction with Cuba could steer Isaac in another direction, further west or even back to the east. So for the moment the amount of impact Isaac is likely to have is very difficult to predict.

Keep an eye on tropical storm Isaac over the weekend on our 2012 Atlantic Hurricane Season page.

Isaac’s current location:

Tropical storm (soon to be hurricane) Isaac forecast path

Update, Sunday 4.30am ET:
Note: Our latest article on Isaac can be found here.

Isaac remains a tropical storm at this time. Isaac has now passed Haiti and Cuba, where there are reports of flooding, damage and a number of deaths and the storm is now heading into the straits of Florida. Currently the Florida Keys are directly in Isaac’s path and the storm is forecast to become a category 1 hurricane by the time it reaches the Keys.

After that Isaac is forecast to head into the Gulf where it will likely strengthen further. The current forecast shows an eventual landfall on Wednesday morning in the Florida panhandle area, although the cone of uncertainty stretches from western Florida to New Orleans. By the time Isaac makes this landfall on the Gulf Coast it is expected to be a much stronger storm, possibly as high as Cat 2 or even 3 with sustained winds over 100mph. If that eventuality occurs then we could be looking at a large loss event depending on the exact location of landfall.

Interestingly, risk analytics firm Core Logic have estimated that there is more than $27 billion in potential exposure to residential property damage along Gulf Coast from projected hurricane Isaac storm surge. Those are worst case figures but show the extent of the exposure in the Gulf Coast area to storm surge alone, so not taking into account wind damage, flooding and other impacts further inland.

We’ll update you again on Monday once Isaac has passed the Keys and the storms strength and track is better understood.