Chevron CEO Warns Oil Buffers Are Gone

Chevron's CEO Mike Wirth warned that oil buffers are gone and prices may not ease quickly. Speaking at a University of Texas energy conference, Wirth explained that commercial inventories, government reserve releases, and barrels parked on water under sanctions have been depleted since the Iran war began in late February.

Before the war, Hormuz, which normally moves about a fifth of global oil, effectively shut. Prices jumped, but not as far as a 20-percent supply shock would imply, due to these three cushions absorbing the blow. However, those cushions are now gone, and Wirth sees risks to the upside over the next few months.

The absence of inventory buffers is evident in U.S. retail diesel crossing $6 a gallon for the first time, Brent pushing back through $100, and Asia's product hub in Singapore printing multi-week highs in gasoil and bunker fuel.