In late morning trading on 28 August, the price of West Texas Intermediate oil was $118.54 on the New York Mercantile Exchange.

However, this still marked a fall of around $5 on the previous week and some $30 shy of the all-time record of $147.27 set on 11 July.

Investment bank Barclays Capital says that Gustav is likely to hit US Gulf onshore and offshore oil facilities over the next few days, which is likely to affect production levels. Shell has evacuated all the workers from its offshore operations in the area.

Barclays notes that, although it may be the most menacing storm to hit the Gulf since 2005, the reaction from the market has remained relatively muted.

“If it becomes a problem, then the market will have gained an upside," the bank predicts. "Alternatively should it move away calmly, then that is likely to represent the cue for a sharp burst of selling."

The bank adds that while short-term prices will be determined by Gustav, recent questions on the pace of Caspian Sea development and its reliability following pipeline attacks in Turkey and the Georgian conflict is likely to take a while to play out.