According to the British Financial Times, on May 28, at a conference organized by investment firm Bernstein, Michael Woods, CEO of American oil giant Chevron, warned that due to the situation in Iran, crude oil inventories are declining, and oil prices are likely to rise in the next two months.
He believes that the reserves that can serve as a market buffer are being depleted. Compared to the early stages of the Iranian crisis, the markets ability to absorb supply-demand imbalances has significantly weakened.
Mike Worris predicted, In the coming weeks, the pressure from supply and demand will be transmitted more directly to spot oil prices. After entering June, especially in July, the upward pressure on oil prices will increase further.
According to Worths analysis, multiple factors have contributed to the failure of oil prices to meet market expectations. For example, before the conflict began, there was a high level of crude oil inventories. Subsequently, the United States released its strategic oil reserves. Additionally, countries such as Iran, Russia, and Venezuela continued to transport crude oil. Worth added that currently, various buffer inventories are nearing depletion.
He stated that this energy crisis will prompt governments around the world to prioritize the establishment of risk management mechanisms. By increasing reserves of crude oil, countries can better withstand various unexpected shocks.
Policy makers must recognize that a new crisis could strike at any time. Determining when to replenish stocks and how long to continue taking risks will be a difficult decision that policymakers in all countries will have to face.
Worth also noted that the demand for replenishing stocks will further increase market demand, thereby adding upward pressure on oil prices.
He also mentioned that the oil and gas infrastructure in the Middle East has been severely damaged. The costs of repairing these damages amount to hundreds of billions of dollars, which will continue to drive up oil prices.
If the current situation continues to remain stalemated, the global economy may slow down or even enter a recession. At that time, demand for crude oil will decline, thereby counteracting the upward trend in oil prices. This possibility cannot be ruled out, he added.
Importantly, this statement by Waters also echoes the growing concerns of economists. Some analysts believe that even if a ceasefire agreement is reached between the two sides, the impact of this conflict on energy prices will continue for months. Currently, the global crude oil supply has decreased by 12 to 13 million barrels per day.
In addition to Worth, several senior executives in the oil industry have also issued warnings recently.
The CEO of Abu Dhabi National Oil Company, Sultan Jaber, warned on May 21 that even if the conflict is resolved, it will be difficult for the Strait of Hormuz to resume full-capacity oil transportation by next year.
Sultan Jaber believes that it will take at least four months for crude oil capacity to return to 80% of its pre-conflict level. For full restoration of navigation, it will take at least the first quarter of 2027, or even the second quarter.
