Chief executives at the largest US oil firms warn the global market is fast approaching a supply-driven tipping point after two months of the Strait of Hormuz blockade.
Back
Back
Oil CEOs Warn of Price Spike as Brent Crude Tops $114
(P1) Chief executives at Exxon Mobil, Chevron, and ConocoPhillips warned this week that the prolonged closure of the Strait of Hormuz is pushing the global crude market toward a tipping point, as Brent crude futures traded above $114 per barrel.
(P2) "Most people are clear that if you look at this unprecedented shock and the global supply of oil and gas, the market has not yet fully reflected its full impact," Exxon Mobil CEO Darren Woods said in a call with analysts Friday. "If the strait continues to be closed, the follow-up effects will be further revealed."
(P3) The warnings come as the critical waterway, which handles 20 percent of the world's oil, has seen vessel traffic plummet by over 95 percent, according to UN data. The CEOs cautioned that global commercial inventories, strategic reserves, and crude stored on tankers before the conflict began are being steadily depleted, removing the supply cushion that moderated prices in March and April. Brent crude settled at $114.66 per barrel late Wednesday.
(P4) The standoff is already hitting consumers, with US gasoline prices reaching $4.30 per gallon, and threatens broader economic disruption from factory closures to rising food prices. Prediction markets currently place just a 40.5% probability on the US blockade of the strait being lifted by May 2026, signaling sustained upward pressure on energy prices.
A War of Attrition
The stark warnings from industry leaders contrast with some expert analysis and White House claims. President Donald Trump recently predicted Iran's oil infrastructure would "explode from within" in days, a scenario energy scholars like Rosemary Kelanic of Defense Priorities called unrealistic. "Nothing is going to self-destruct," Kelanic said.
Data from TankerTrackers.com suggests there are enough empty tankers within the blockade area to hold 45 million barrels of Iranian oil, representing up to six weeks of normal exports. Still, a senior administration official insisted Iran's infrastructure was under stress that would cause lasting, irreversible damage. The Treasury Department estimates the production halt is costing Iran roughly $170 million per day in lost revenue.
"The global oil shortage is already showing up on U.S. shores," said Mark Finley, a fellow at Rice University’s Baker Institute, pointing to rapidly falling U.S. inventories. "Every day that strait is closed, the global oil situation gets more dire."
This article is for informational purposes only and does not constitute investment advice.
[1] CEOs of Several US Oil Giants Warn: The Energy Market is Approaching the Edge of a Cliff[2] Trump said Iran’s oil pipelines will soon ‘explode.’ Experts doubt it[3] UN warns Hormuz crisis disrupting global markets amid US-Iran tensions[4] Brent crude hits $114.66 per barrel as Hormuz blockade squeezes global supply[5] Exxon stock slips. CEO warns 'full impact' of war is coming.
