Insurance companies are predicting Hurricane Katrina could cost up to $25 billion US in pay-outs  -- making it the most expensive hurricane ever to hit the United States.

"We expect the bulk of damage to be wind-related, but there is significant flood risk to commercial insurers," said Thomas Larsen, of California-based storm modelers Eqecat Inc.

Residents of hurricane-stricken areas are being urged to alert their insurance companies of damages and to take preventative action.

"Realistically, it's going to be days and weeks before insurance adjusters can visit all those properties damaged because we're probably talking about upwards to a million claims throughout the southern United States," said Mark Yakabuski, of the Insurance Bureau of Canada, appearing on CTV's Canada AM.

"What people should do, of course, is take all necessary steps to prevent any further damage. They should begin trying to take the water out of their homes as quickly as possible."

Katrina also propelled crude oil futures to a new high Monday, as the powerful storm bore down on a critical centre of American energy infrastructure.

"We're in a situation where the global oil markets are very tight, both from a supply side as well as in terms of the refining system," said Vincent Lauerman, of the Canadian Energy Research Institute, appearing on Canada AM.

"There's not a lot of capability to run what spare production capacity there is available and as a result any sort of hiccup in the system is bound to lead to at least somewhat higher prices."

The price of a barrel of light, sweet crude surged past the $70 US-mark for the first time in after-hours electronic trading on the New York Mercantile Exchange.

The southern states of Louisiana and Mississippi are home to a concentration of oil refining operations, import terminals, and pipeline networks.

They also serve as the gateway for significant offshore oil and gas production in the Gulf of Mexico.

Watching the market action from Toronto, Linda Sims of Report on Business Television says Katrina's effects could be felt for a long time.

In the weeks after Hurricane Ivan struck last September, Sims said, the price of crude jumped 22 per cent. It took six months before production was up and running again.

"Even if Katrina doesn't hit anything this time, you'll have disruptions in supply," Sims said.

For those who once thought the $50 US threshold was unbreakable, Sims said the equation has now changed.

"The trouble is that we know there is simply no sizeable amount of production anywhere in the world that can pick up the slack when you see a major disruption like this," she told CTV Newsnet.

Although the U.S. has plenty of crude oil reserves, if the region's refineries are crippled it could send the price of gasoline and other petroleum-based products soaring.

"If this thing knocks out significant quantities of refining capacity ... we're going to be in deep, dark trouble," Ed Silliere of Energy Merchant LLC told the Associate Press.

Oil companies evacuated their employees and shut down more than 600,000 barrels of daily production. Gulf refiners have also put a stop to more than 1 million barrels of refining output.

America's largest oil import terminal -- the Louisiana Offshore Oil Port -- has also been closed. Shut since Saturday, the closure cuts off a supply route that usually handles 11 per cent of the entire country's imports.

Energy analyst Victor Shum said Katrina's impact on production in the Gulf of Mexico -- which normally accounts for approximately one-fourth of U.S. domestic oil output -- is even more worrying.

"It's not only the suspension of production that's causing concern, it's the fact that we could see potential damage to the platforms, which would cause longer disruptions to production," the Singapore-based analyst told AP.

"It looks like the perfect storm to drive prices up.''

The soaring insurance cost predictions could make Katrina more costly than Hurricane Andrew, which resulted in about $20.9 billion of claims when it ravaged southern Florida in 1992.