Updated: 5:45 p.m. ET
(Bloomberg) -- Irma swept over islands in the Caribbean and barreled toward Puerto Rico with Florida in its sights as the Category 5 hurricane threatens to become the most expensive storm in U.S. history.
The threat of a strike in Florida over the weekend and early next week has increased, the U.S. National Hurricane Center said. Hurricane watches could be issued for parts of the Florida Keys and the Florida peninsula on Thursday. Barclays Plc has estimated insured losses in a worst-case scenario from the storm at $130 billion.
|'Significant threat'
“The chances for this missing the U.S. are going way down,” said Rick Knabb, hurricane expert with the Weather Channel in Atlanta and until last year the director of the National Hurricane Center. “This is a very significant threat to Florida and the southeast U.S.”
Reinsurance companies may take more of the hit than primary insurers, which have reduced their exposure to Florida in recent years, analysts say. Stocks across the sector are expected to face continued volatility until there’s more clarity around the storm’s path and damage.
|Irma is 340 miles across and expected to grow
Irma spans 370 miles across, and would cover the state of New York, and is expected to grow, said Jeff Masters, co-founder of Weather Underground in Ann Arbor, Michigan.
By late Wednesday, Irma will have generated more energy than the entire 2013 Atlantic hurricane season, said Phil Klotzbach, a storm researcher at Colorado State University.
|Destructive winds
The U.S. Environmental Protection Agency said dangerous winds could cause power outages complicating the ability to pump water through drinking and waste water systems, especially in Puerto Rico.
Irma comes less than two weeks after Hurricane Harvey smashed ashore in Texas, knocking offline almost a quarter of U.S. oil refining capacity and causing widespread power outages and flooding. Models show Irma veering away from gas and oil platforms off the coast of Texas and Louisiana, sparing Houston more devastation.
Irma’s top winds were holding at 185 miles (300 kilometers) an hour as of 5 p.m. New York time, making the system a Category 5, the highest measure on the five-step Saffir Simpson scale. It was about 55 miles east north east of San Juan, Puerto Rico. Irma could be off the Georgia coast as a major hurricane Monday.
|Mandatory evacuations
In the U.S., mandatory evacuations were issued for the Florida Keys and Governor Rick Scott said he expected additional evacuation orders. President Donald Trump said in a Twitter post that he is “watching hurricane closely” and his team is already in the state.
A direct strike on Miami at Category 4 strength could lead to insured losses of $125 billion to $130 billion, Jay Gelb, an analyst at Barclays, wrote in a note Tuesday. Uninsured losses would add to that.
Losses from Katrina, both insured and uninsured, reached $160 billion in 2017 dollars after it slammed into New Orleans in 2005, according to the U.S. National Centers for Environmental Information.
Once past Florida, the misery won’t be over for the U.S. because the storm could run up the East Coast or drive deep into the continent, bringing flooding rains, said Knabb.
Only three Category 5 hurricanes have hit the contiguous 48 U.S. states, according to Weather Underground: the Labor Day Hurricane of 1935 that devastated the Florida Keys, Hurricane Camille in 1969 and Hurricane Andrew that cut across Florida in 1992.
|In other storm news
Jose, further east than Irma over the Atlantic, became a hurricane, while Katia also reached that strength in the Gulf of Mexico. Orange juice futures fell after gaining on Tuesday as the storm threatened the largest supplier after Brazil. Cotton also retreated.
Irma could cut power to about 2 million customers in Florida. NextEra Energy said it’s ready to shut down two nuclear power plants in Florida — Turkey Point and St. Lucie — that may be in the storm path "long before" the onset of hurricane force winds.
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