Chevron Corporation (NYSE:CVX) CEO Mike Wirth said on Sunday that oil prices are likely to remain under “upward pressure” as the U.S.-Iran conflict continues to disrupt global supply.
Hormuz Crisis Hurting Supply and Inventory
On Sunday, in an interview aired on “Face the Nation” with Margaret Brennan, Wirth described the current situation as a structural shock to the global energy system, with critical supply routes, particularly the Strait of Hormuz, significantly disrupted. He noted, “The global economy consumes about 100 million barrels of oil every day, and about 20% of that moves through the Strait of Hormuz.”
He said stockpiles in tanks, ships, and strategic reserves have been reduced over the last couple of months, making the market less able to cushion shocks and leaving prices more exposed to supply interruptions.
Wirth said the quickest path to easing pressure is restoring movement through the Strait of Hormuz, arguing that the market cannot easily replace the volume affected. He added that even if flows restart quickly, rebuilding inventories and rerouting logistics would not be immediate.
He said new oil production will take time to come into the market. “You can’t turn on production at a moment’s notice. It takes engineering, it takes supply chains, it takes contracts and workers moving and being mobilized.”
Geopolitical Tensions Impacting Oil Supply Dynamics
This situation unfolds amid heightened tensions in the region, as U.S.-Iran tensions dashed hopes for a lasting Middle East peace deal.
Iran declared the Strait of Hormuz reopened only to later restrict vessel traffic, citing U.S. non-fulfillment of obligations. Trump’s warning to “knock out every single Power Plant, and every single Bridge, in Iran” if conflict terms are not met underscores the precarious nature of oil supply routes and the potential for further instability in the market.
Amid escalating tensions in the region, Wirth has also warned that the ongoing crisis in the Strait of Hormuz could lead to significant disruptions in air travel.
Chevron’s Effort to Boost Supply
Writh said in the Sunday interview that Chevron achieved record U.S. production of 2 million barrels per day last year, including 1 million barrels per day from the Permian. He expects to grow production by another 7% to 10% this year.
In the near term, the company is moving crude oil and refined products from the Gulf Coast to the West Coast to support markets in Alaska, Hawaii, and California. These measures help address immediate supply needs. Over the longer term, the solution lies in policies that promote consistent investment in infrastructure, enabling increased supply and building a more resilient energy system.
Benzinga Edge Stock Rankings indicate that CVX has a Momentum score at the 77th percentile. It maintains a weak price trend in the short term, while maintaining a strong trend in the medium and long term.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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