Oil Executives Warn of Years of Market Disruption and High Prices
The global oil industry is preparing for prolonged market disruptions, with executives warning that high oil prices will persist beyond this year. Shipping bottlenecks, reduced refinery output, and depleted inventories are expected to take years to resolve. The conflict between the U.S., Israel, and Iran, which began in late February, has significantly impacted oil exports by closing the Strait of Hormuz, a critical shipping route. Attacks on oil and gas infrastructure have further exacerbated production challenges.
Petronas CEO Tengku Muhammad Taufik described the situation as chaotic, predicting turbulence through the end of the year and possibly into 2027. Saudi Aramco CEO Amin Nasser stated that replenishing global inventories could take up to two years, even after the Strait of Hormuz reopens. He noted that 3 billion barrels have been lost since the conflict began, with 1 billion barrels withdrawn from global inventories. The disruption has affected both unrefined crude and refined products like diesel and jet fuel.
Kuwait Petroleum Corporation CEO Shaikh Nawaf Al-Sabah highlighted a shortfall of 6 million barrels per day of refined products due to the conflict. He emphasized the need to restore Middle East refineries to full production but noted a global shortage of refining capacity. Despite the disruptions, Kuwait's crude oil exports have remained steady at around 1 million barrels per day, though production has declined from 2.6 million to 2 million barrels per day.
ConocoPhillips Executive Chair Ryan Lance predicted that global oil demand may not fully recover until 2028 or 2029, following a dip this year. He forecasted that the U.S. benchmark WTI crude price floor could rise to around $70 per barrel, with a mid-cycle price range of $65 to $70. Should prices remain strong, U.S. oil production could exceed 14 million to 14.5 million barrels per day. Brent crude futures were trading just above $100 per barrel, while WTI was close to $90 per barrel.