Oil Market Disruptions Expected to Persist for Years Amid Supply Crunch

Industry executives at a London conference warned that global oil market turmoil could persist for years, driven by persistent supply disruptions and refining capacity shortages. The conflict between the US, Israel, and Iran, which began in February, has severely impacted oil exports through the Strait of Hormuz, a critical shipping route. Attacks on energy infrastructure have further exacerbated production challenges and export bottlenecks.

Petroliam Nasional Bhd (PETRONAS) CEO Tan Sri Tengku Muhammad Taufik predicted ongoing volatility, stating, "I think it is going to be bedlam for the bulk of the end of the year and maybe 2027." Saudi Aramco CEO Amin Nasser echoed concerns, noting that replenishing depleted global inventories, one billion barrels have already been withdrawn, could take up to two years even after the Strait of Hormuz reopens.

Kuwait Petroleum Corporation CEO Shaikh Nawaf Al-Sabah highlighted a global shortfall of six million barrels per day of refined fuels, attributing the gap to reduced refining capacity in the Middle East. Despite war-related disruptions, Kuwait has maintained crude oil exports around one million barrels per day, though production has dropped from 2.6 million to two million barrels per day.

ConocoPhillips executive chair Ryan Lance projected a slower recovery in global oil demand, potentially extending into 2028 or 2029. He forecasted a rise in the oil price floor for US benchmark West Texas Intermediate (WTI) crude to around US$70 per barrel, with a mid-cycle range of US$65 to US$70. Strong prices could push US oil production above 14 million barrels per day, though specific conditions were not defined. Brent crude futures traded near US$100 per barrel, while WTI hovered around US$90 per barrel.