Chevron chief executive Mike Wirth has warned that oil markets have far less cushioning than they did when the Iran conflict first began, a message that sits uneasily alongside White House optimism that fuel costs will ease after the midterms.
Speaking at an energy conference at the University of Texas at Austin on 11 September, Wirth said the measures that initially helped blunt the supply shock have largely been exhausted. Strategic reserve releases, inventory drawdowns and t...
Continue Reading This Article
Enjoy this article as well as all of our content, including reports, news, tips and more.
By registering or signing into your SRM Today account, you agree to SRM Today's Terms of Use and consent to the processing of your personal information as described in our Privacy Policy.
he easing of restrictions on some sanctioned crude stored at sea all helped to soften the first blow, he said, but those supports are now largely gone. As a result, he argued, the balance of risk over the coming months is tilted towards higher prices rather than lower ones.
“It’s harder to envision a scenario where prices soften and quickly,” Wirth said, adding that the market no longer has the same buffers it did when the fighting began. He also said the loss of flexibility had become more acute after attacks disrupted a major Saudi crude pipeline that had been bypassing the Strait of Hormuz, removing an estimated 2.5 million barrels a day from reliable circulation and tightening an already strained market.
The warning lands at a sensitive political moment. President Donald Trump has suggested oil prices will fall after the election, tying the timing to the prospect of an end to the Iran war. But Wirth’s assessment implies that any relief may take far longer to arrive, particularly if physical supply losses continue to outpace the market’s ability to adjust.
The pressure is already visible in fuel costs. According to reporting cited by TheStreet, American consumers have paid about $97 billion more for fuel since the conflict began in late February, equivalent to roughly $740 a household. Diesel prices rose above $6 a gallon on 10 September for the first time, while national retail prices for gasoline climbed back to around $4.32 a gallon. Brent crude has moved to about $105 a barrel, up sharply from roughly $70 before the war, while West Texas Intermediate has traded above $100.
Wirth also pointed to Ukraine’s attacks on Russian energy infrastructure and said Chevron had since seen fewer disruptions at its Tengiz oilfield in Kazakhstan. Separate reporting from Fortune earlier this year suggested he had already been worried that markets were underestimating the physical impact of the Strait of Hormuz disruption, a sign that his concern about tight supply has been building for months.
The broader economic consequences are obvious. Diesel underpins trucking, farming, construction and freight, so higher prices feed quickly into distribution and logistics costs. Gasoline hits household budgets more directly, leaving consumers with less room to spend elsewhere. That is why the issue carries significance well beyond the energy sector: if oil stays elevated, inflation pressures could persist even as policymakers try to restrain demand.
For Chevron, the near-term effect is more favourable, with higher crude prices likely to support upstream earnings and cash flow. For the wider economy, however, Wirth’s message is a reminder that the market may have already used up many of the tools that helped absorb the first shock.
Source: Noah Wire Services
