Concerns over availability will soon replace fears about price, according to Mike Wirth<\/p>\n
Physical oil shortages could begin to emerge worldwide within weeks due to the Middle East war and continued closure of the Strait of Hormuz, Chevron CEO Mike Wirth has warned.
\nAttacks on energy infrastructure\u00a0and a dual shipping blockade in the critical waterway \u2013 which carries about a fifth of global seaborne oil and LNG \u2013 have sharply cut deliveries and pushed prices to multi-year highs. Multiple tankers have remained stranded in Hormuz since the initial US and Israeli strikes on Iran in late February. Washington and Tehran remain at odds over the strait\u2019s future, with reports saying the US rejected Iran\u2019s proposal for a new governance mechanism as part of peace talks.
\nAlthough active fighting paused under a fragile ceasefire last month, tensions flared again on Monday, when American and Iranian forces exchanged fire as the US military began escorting vessels through the strait.
\nSpeaking at the Milken Institute Global Conference in Los Angeles on Monday, Wirth said economies will begin slowing, first in Asia \u2013 the most dependent on Gulf oil \u2013 and then in Europe, as supply tightens.<\/p>\n
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\u201cWe will start to see physical shortages\u2026 Demand needs to move to meet supply. Economies are going to have to slow,\u201d he said, as cited by Reuters, noting that commercial stockpiles, shadow tanker fleets, and strategic reserves are already being drawn down to delay shortages.
\nHe warned the impact of the Hormuz closure could be \u201cas big as in the 1970s,\u201d when supply shocks triggered the oil crises of 1973 and 1979, sending prices soaring and causing widespread fuel shortages across the US, Europe, and Japan.
\nWirth reiterated the warning in an interview with CNBC, saying physical availability \u2013 not just price \u2013 will soon become the main concern.
\n\u201cAs people look at the realities of very tight supplies, it\u2019s not just a question of price, it\u2019s actually can we get the fuel… Over the course of the next several weeks, we\u2019ll see those effects begin to move throughout the system,\u201d he said, noting that some European airlines are already restricting jet fuel use and cutting flights, while several Asian countries have introduced demand-reduction measures.<\/p>\n
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Wirth said the US, as a net crude exporter, would be less affected initially, though it will feel the impact through higher prices in the long run. Even once Hormuz reopens, he warned it would take months to stabilize supply routes.
\nThe fallout is already visible, including in the US. Budget carrier Spirit Airlines said over the weekend it was going out of business, citing surging fuel costs. The crisis has also driven shifts in energy policy. The UAE last week said it would leave\u00a0OPEC and the broader OPEC+ format, citing the need for greater flexibility over domestic output.
\nWirth\u2019s warning echoes recent assessments by the International Energy Agency and the World Bank. IEA head Fatih Birol said disruptions tied to Hormuz pose \u201cthe biggest energy security threat in history,\u201d with some 13 million barrels per day lost.<\/p>\n
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The World Bank projected\u00a0energy prices to jump 24% this year, with overall commodity costs rising 16% as the shock spreads beyond oil and gas.<\/p>\n","protected":false},"excerpt":{"rendered":"
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