Hurricane Katrina was a Category 3 hurricane when it made landfall at the mouth of the Mississippi River on August 29, 2005. Storm surge caused catastrophic damage in Louisiana, Mississippi and Alabama. Flood barriers separating Lake Pontchartrain from New Orleans, Louisiana, breached due to storm surge, flooding 80% of the city. Strong winds blew inland, hampering rescue efforts. Hurricane Katrina is estimated to have caused at least $75 billion in economic losses, making it the most devastating hurricane in U.S. history. It is also the deadliest U.S. hurricane since Hurricane Otchichupee in 1928, with at least 1,836 lives lost.

Affected by Hurricane Katrina, more than one-third of the oil fields near the Gulf of Mexico were forced to shut down, and seven refineries and an important U.S. crude oil export facility also had to temporarily suspend operations. The price of crude oil on the New York Mercantile Exchange surged US$4.67 per barrel when the market opened on August 29, reaching US$70.8. In Atlanta, prices at gas stations are as high as $5 a gallon. On August 31, Bush agreed to use strategic petroleum reserves to help severely damaged crude oil processing plants resume production. International Energy announced on September 2 that all 26 member countries have unanimously agreed to put 2 million barrels of crude oil from strategic reserves on the market every day for 30 days to help resolve market tensions caused by Hurricane Katrina. Crude oil futures prices in the New York market fell sharply that day.