London — Chevron CEO Mike Wirth said the global oil and gas market is becoming increasingly constrained as the conflict involving the United States, Israel and Iran continues into its eighth month.
Speaking Tuesday at the Energy Intelligence Forum in London, Wirth said underlying market fundamentals have tightened, while the buffers available for oil and fuel supplies have become smaller.
He described the global energy system as more fragile than it was earlier in the conflict. Wirth also said the floor beneath oil prices was gradually rising as supply conditions became more constrained.
His comments come as energy markets continue to deal with the effects of prolonged geopolitical disruption. Oil prices remain near $100 a barrel even though some supply indicators have improved.
The situation highlights the competing forces affecting the oil market. Producers have continued moving significant volumes despite disruptions, helping prevent an immediate supply crisis. However, the prolonged conflict has reduced the spare capacity and inventories available to absorb additional shocks.
For energy companies and consumers, smaller supply buffers can leave markets more sensitive to new disruptions. Any further interruption to production, transportation or refining could have a greater impact when fewer reserves are available to offset the loss.
Wirth’s assessment comes as oil companies and policymakers assess the longer-term effects of the conflict on energy security. As disruptions continue, maintaining the same degree of flexibility that existed before the crisis could become increasingly difficult.
The Chevron CEO’s comments point to a market in which current supply flows do not necessarily indicate that the underlying risks have disappeared. Oil continues to reach consumers, but the smaller cushion supporting the system could leave prices more exposed to future shocks.
The energy industry is therefore closely watching both physical oil flows and geopolitical developments. A sustained decline in supply buffers could keep upward pressure on the minimum level at which oil trades, even if temporary improvements in exports cause prices to retreat.
Wirth’s assessment serves as a warning that current supply stability should not be interpreted as a return to normal conditions. The underlying market remains vulnerable as the conflict continues.
Original article
Comments