Oil Industry Faces Years of Disruption and High Prices

The global oil industry is preparing for prolonged market disruptions, with executives warning that high prices will persist well beyond this year. Shipping bottlenecks, reduced refinery output, and depleted inventories are key factors contributing to the ongoing instability. The closure of the Strait of Hormuz following the US-Israeli conflict with Iran has severely impacted oil exports, compounded by attacks on infrastructure that have disrupted production and distribution.

Petronas CEO Tengku Muhammad Taufik described the situation as "bedlam," expecting turbulence to continue through 2026 and possibly into 2027. Saudi Aramco's CEO Amin Nasser stated that it could take up to two years to replenish global inventories, which have been significantly drawn down as an emergency measure. He noted that 3 billion barrels have been lost since the conflict began, with 1 billion barrels withdrawn from global stockpiles.

Kuwait Petroleum Corporation CEO Shaikh Nawaf Al-Sabah highlighted a global shortfall of 6 million barrels per day of refined products due to the war. He emphasized the lack of sufficient refining capacity worldwide to compensate for the shuttered facilities in the Middle East. Despite disruptions, Kuwait's crude oil exports have remained steady at around 1 million barrels per day, although production has declined from 2.6 million to 2 million barrels per day.

ConocoPhillips' Executive Chair Ryan Lance projected that global oil demand may not fully recover until 2028 or 2029. He forecasted that the price floor for US benchmark WTI crude will rise to around $70 per barrel, with a mid-cycle price range of $65 to $70. Should prices remain strong, US oil production could exceed 14 million to 14.5 million barrels per day. Brent crude futures traded just above $100 per barrel, while WTI was close to $90 per barrel at the time of the report.