Chevron CEO Warns of Thinning Oil Supply Buffers Amid Middle East Conflict

Chevron CEO Mike Wirth warned on Tuesday that the global energy system is becoming increasingly fragile as the Middle East conflict stretches into its eighth month. Speaking at the Energy Intelligence Forum in London, Wirth highlighted that oil and fuel supply buffers are thinning, pushing up the price floor for oil.

Wirth noted that the landed price of physical oil in Asia is currently closer to $150 per barrel, significantly higher than the $100 per barrel where Brent oil futures are trading. The market is also facing tightness in refined products, leading to higher prices for fuels like gasoline and diesel compared to the crude oil they are derived from.

Governments are considering measures to protect consumers and industries from rising fuel costs. Last week, the G7 agreed to release 100 million barrels of crude and diesel from strategic reserves amid threats of a potential US ban on exports. Wirth cautioned that restricting supply, such as through an export ban, would constrain global supplies at a time when they are critically needed.

He also suggested that a diesel ban might not achieve the intended effect of helping US consumers, especially with the midterm elections in focus.