HOUSTON — Oil companies and the world’s largest energy consumers face a significant challenge to rebuild global petroleum supply chains and inventories once the critical Strait of Hormuz bottleneck opens, Chevron CEO Mike Wirth said Monday.
“We’ve got a lot of oil and gas now that is not flowing into the market,” Wirth said at the CERAWeek by S&P Global conference in Houston. “Physical supply chains don’t respond immediately, so even if the strait opens at some point, it will take time to rebuild inventories of the right grades of crude and the right types of fuel.”
Wirth cautioned that Iran’s attacks on oil tankers and the broader damage of the Middle East war did greater damage to oil and gas markets than the Russia-Ukraine war. Asian nations are running low on diesel and jet fuel. The war has held up deliveries of LNG, fertilizer and other products.
Part of the challenge, Wirth said, will be taking a read of the damage. It’s unclear how much production has been shut in, Wirth said, and how badly some facilities were damaged.
At the same event, Energy Secretary Chris Wright reiterated to oil executives that he anticipated the global disruption to oil and gas flows would be “short-term,” but he encouraged companies to ramp up production.
“Markets do what markets do,” Wright said. “Prices went up to send signals to everyone that can produce more: ‘Please, produce more.’”