Updated Oct. 5, 2017 - 11 a.m. EST

(Bloomberg) -- Tropical Storm Nate has formed off of Nicaragua,and could grow into a hurricane that is forecast to strike theU.S. Gulf Coast late Sunday, potentially shutting down offshore oiland natural gas rigs and dealing another blow to citrusgrowers.

Nate was about 10 miles (16 kilometers) south of Puerto Cabezas,Nicaragua, with top winds of 40 miles per hour, the U.S. National Hurricane Center said an advisory at 8a.m. New York time. The storm’s forecast track has it scraping theeastern edge of Mexico’s Yucatan Peninsula before becoming ahurricane south of Louisiana on Sunday. Nate could come ashoreanywhere from Louisiana to Florida’s Panhandle.

“Little change in strength is expected today as the center ofNate moves across northeastern Nicaragua and eastern Honduras,”Jack Beven, a senior hurricane specialist at the center in Miami,wrote in the advisory. “Strengthening is likely over thenorthwestern Caribbean Sea tonight and Friday.”

Fourteen storms have formed across the Atlantic so far thisseason, killing hundreds of people in the U.S., Mexico and theCaribbean and causing an estimated $300 billion in damage. InAugust, Hurricane Harvey temporarily shut down about25% of oil and natural gas production in the Gulf and as much as20% of U.S. refining capacity and a few weeks later Hurricane Irma devastated Florida citrusgroves.

Wind, storm surge, heavy rainfall

The storm “could affect portions of the northern Gulf Coast as ahurricane this weekend, with direct impacts from wind, storm surge,and heavy rainfall,” Eric Blake, a hurricane specialist at thecenter, wrote in a forecast analysis. “Residents along the GulfCoast from Louisiana to Florida should monitor the progress of thissystem for the next several days.”

Orange juice futures rose as much as 2.5% to $1.5925 a pound onICE Futures U.S. in New York. Florida is the world’s second-largestorange juice producer.

“There’s been already plenty of damage; having another storm,even it’s a Category 1, is not going to help the crop,” Jack Scoville,vice president for Price Futures Group in Chicago, said intelephone interview. “People are kind of jumpy.”

The system “definitely” poses a risk to U.S. cotton areas aswell, particularly western portions of the southeast, includingAlabama and Georgia, the second-largest cotton grower after Texas,Donald Keeney, meteorologist with MDA Weather Services inGaithersburg, Maryland, said in a telephone interview.

Could strengthen to Category 2

As it nears the U.S. coastline the storm, Nate could strengthen toa Category 1 hurricane on the five-step Saffir-Simpson scale, thehurricane center said. There’s even a chance it could be a Category2 storm if it passes over a patch of particularly warm water inGulf of Mexico called the Loop Current, said Jeff Masters,co-founder of Weather Underground in Ann Arbor, Michigan.

“If it goes over the Loop eddy that would give it a lot of fuelfor intensification,” Masters said.

Yucatan Peninsula

In addition, how the storm interacts with the Yucatan Peninsulawill also have a big impact on its ultimate strength, said ToddCrawford, chief meteorologist at The Weather Company in Andover,Massachusetts.

Related: Hurricane preparation step-by-step: What to do as astorm approaches

“If the storm shoots the gap between the Yucatan and Cuba, therewill be limited weakening due to land interaction before the stormemerges into the Gulf,” Crawford said. “This would increase thechances of rapid intensification and would be a more dire situationfor the eastern Gulf Coast.”

There’s about a 30%t chance it will disrupt U.S. offshore energyoperations, as companies may evacuate some personnel, said MattRogers, president of the Commodity Weather Group LLC in Bethesda,Maryland.

Offshore rigs and platforms in the Gulf of Mexico account forabout 17% of U.S. crude oil output and 4.1% of gas production.About 45% of petroleum refining capacity and 51% of gas processingis along the coastline.

Likely to cross over Honduras & Nicaragua Thursday

As the storm moves over warm water, it will grow in intensity, butby Thursday, it should cross over Honduras and Nicaragua robbing itof strength, Rogers said. Later this weekend, it could encounterwind shear that can tear storms apart in the Gulf ofMexico.

“That is going to be the trick, getting the intensity figuredout,” Rogers said.

Royal Dutch Shell Plc is minimizing staff in the eastern Gulfand taking steps to secure facilities, the company said in astatement. BP Plc is evacuating nonessential staff from its ThunderHorse and Na Kika crude and gas production platforms.

Threat of life-threatening mudslides

The storm will bring as much as 20 inches (51 centimeters) of rainto Nicaragua, with some areas getting as much as 30 inches, andlesser amounts to Costa Rica, Panama and Honduras. The heavy rain could cause life-threateningmudslides throughout the region.

Its location in the western Caribbean means it can draw moisturefrom both the Atlantic and Pacific oceans, which will make theflooding worse, Masters said.

The good news is that the storm should be falling apart by lateSunday, “so it will be short-lived,” Rogers said.

Related: What businesses can learn from Harvey and Irmabefore the next hurricane

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