Mining company BHP Billiton, along with other oil stocks, helped drag the FTSE 100 down 1.4 per cent after it revealed that damage by Hurricane Rita would lead to lower oil production than previously forecast.
The company said it would produce 10m fewer barrels of oil this year than it had previously stated.
The company said two of its Gulf of Mexico fields, called Typhoon and Boris, had been “heavily damaged” and were responsible for almost half the loss of production.
The remainder of the shortfall came from unplanned losses in its Australian business, and existing agreements the company has to ease production as oil prices increase.
Rivals BP and Shell also fell by as much as 1.5 per cent on early trading, as investors feared that hurricanes Katrina and Rita may have hurt industry-wide production more greatly than originally forecast.
The FTSE fell by 75 points to 5,266.8 on early receipt of the news. Billiton said that two teams were looking at its Typhoon and Boris fields. One team would be studying why the fields were so badly damaged, while the other would assess how best to restore the sites.
The company said: “We expect the investigation team to take several weeks and the restoration team to take several months to complete their work.”
Billiton said that in the year to 30 June the Typhoon field produced 4.3m barrels of oil and 7.1bn cubic ft of natural gas, and accounted for less than 5 per cent of the company’s output.