Exxon, Chevron warn oil could hit $160 as war in Iran pushes inventories to ‘really low’ | Today’s news

Two of America’s most powerful oil companies warned repeatedly last week that the world is running out of oil supplies that have so far prevented the Iran war from triggering an energy crisis of the most acute kind. Executives at both Exxon Mobil and Chevron told a Wall Street conference that inventories are nearing a threshold beyond which oil prices have only one way to go.

Exxon warns that oil inventories are nearing “unheard of” lows

Alarming among the two ratings came Exxon Mobil senior vice president Neil Chapman, who told a conference hosted by investment bank Bernstein in New York that the pace at which global oil supplies are declining has no modern precedent.

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“We’re approaching unheard-of inventory levels,” Chapman said.

He was straightforward about where that trajectory ends, suggesting that the only uncertainty is the precise timing of the tipping point, not the tipping point itself.

“I mean really, really low levels,” Chapman said. “You can debate whether it’s going to hit those really low levels in two weeks or three weeks. Once you get to that point, you’re going to see the price shoot up.”

Chapman said oil executives have been raising the concern for two months, warning that oil futures prices consistently do not reflect the true extent of supply disruptions. That showdown, he suggested, was now weeks away.

“I don’t know if it’s two to three weeks or three to four weeks,” Chapman said. “What I’m actually saying is that once you get down to minimum inventory levels and sustained low inventory levels, there’s only one way to go. That’s the situation.”

Brent Crude Could Rise to $150-$160 a Barrel as Stocks Collapse

Chapman put a specific price on the inflection point. When inventories reach their all-time lows, the price of physical Brent crude could climb to $150 to $160 a barrel, he said. At this level, the market would eventually find a new equilibrium, but through a mechanism that carries its own significant economic costs.

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“When the price gets to a certain level, the destruction of demand will bring it back into balance,” he said.

Brent crude futures for July delivery closed below $94 a barrel on Thursday as investors remained hopeful that a US-Iran settlement could reopen the Strait of Hormuz. Brent, the international benchmark, fell nearly 1 percent to $93.71 a barrel, while West Texas Intermediate traded just below $90.

Chevron’s boss sees a sharp increase in price pressure during June and July

Chevron CEO Mike Wirth offered a parallel analysis at the same Bernstein conference, warning that the market’s ability to hold prices steady is eroding at an accelerating rate.

“Bumpers and dampers are constantly being reduced, and the market’s ability to absorb this imbalance is drastically reduced today compared to where we started,” Wirth said.

With those buffers almost gone, he said, the imbalance between global supply and demand will begin to feed directly into prices in the coming weeks.

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“Over the next few weeks, we’re likely to see those pressures feed through more directly to physical prices, and as we get into June and certainly into July, there’s going to be more upward pressure that I would expect,” he said.

The Iran war caused the largest oil supply disruption in history

The warnings from both companies reflect a market under a degree of tension that has not been seen in recent memory. Iran’s closure of the Strait of Hormuz, a narrow channel through which about a fifth of the world’s oil flows, has removed 12 to 13 million barrels of oil a day from global markets during the three months of conflict.

The International Energy Agency called it the largest oil supply disruption in history and estimated that the shutdown cost the market more than a billion barrels in total. The IEA warned earlier this month that supplies were being depleted at a record pace. In March, the organization’s member countries agreed to release a record 400 million barrels from their strategic reserves to limit the damage.

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Wirth said oil prices remained below what many had predicted because three factors acted as cushions: higher-than-normal oil inventories held before the war began, draws from the U.S. Strategic Petroleum Reserve and continued flows of sanctioned oil from Iran, Russia and Venezuela. All three, he said, are now running low.

Chapman made the same point more bluntly, acknowledging that while oil stocks have so far mitigated the disruption, the strategy “can’t last forever.”

Full oil flows through the Strait of Hormuz are unlikely before 2027

The warning from both companies is in line with the broader industry consensus that even a diplomatic solution to the Iran conflict would not bring an immediate recovery in supplies. Physical damage to oil and gas infrastructure throughout the Middle East would cost tens of billions of dollars to repair, Wirth said, and the timeline for restoring full supply through the Strait of Hormuz far exceeds any ceasefire.

Sultan al-Jaber, chief executive of Abu Dhabi’s state oil group Adnoc, offered the tightest timetable at an Atlantic Council event on 21

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“It will take at least four months to return to 80 percent of pre-conflict flows, and full flows will not return until the first or even second quarter of 2027,” al-Jaber said.

Governments are facing increasing pressure to restore strategic oil reserves

The energy crisis exposed a structural fragility that the conflict significantly exposed: the extent to which governments allowed their strategic oil reserves to be depleted without systematic replenishment between crises. Wirth said the war would force a fundamental rethinking of how policymakers approach energy security.

“The likelihood of another shock around the corner is something that policymakers will have to bear in mind … how long they want to roll the dice before restocking is a question I think we’ll see policymakers have to grapple with,” he said.

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However, rebuilding reserves on any meaningful scale would increase market demand at precisely the moment when supply is most constrained.

“That will cause more demand in the market, which will cause a little bit more pressure on the price,” he said.

If the energy crisis persists, the risk of recession increases

Wirth acknowledged that a prolonged period of high oil prices carries systemic economic risks that extend well beyond the energy sector. Sustained price spikes like Chapman predicted for Brent could begin to dampen the economic activity that drives oil demand, setting the stage for a deeper slowdown.

“If it goes on for a long time, it leads us into an economic slowdown or recession, you may have demand-side offsets that you can’t rule out,” Wirth said.