"Oil Inventories Depleted": Warnings from Oil Industry Giants such as Exxon and Chevron

Oil Inventories Serving as 'Market Buffers' Rapidly Depleting
Energy Crisis Spurs Strategic Stockpiling Demand
U.S. Government: "Prices Could Fall Very Quickly Once the War Ends"

Executives from major oil companies, including Exxon and Chevron, have warned that oil inventories, which have served as a 'market buffer,' are being rapidly depleted, raising concerns about the long-term impact of the Middle East war. There are also predictions that the energy crisis triggered by geopolitical risks, including the Russia-Ukraine war, will lead governments around the world to compete in strategic crude oil stockpiling.

On the 22nd (local time), an Exxon gas station in New York State, USA. Photo by Reuters Yonhap News

According to the Financial Times (FT) of the United Kingdom and the U.S. economic media outlet CNBC, Chevron CEO Mike Wirth stated at the 'Bernstein Conference' held on the 28th (local time), "Buffers and shock absorbers are continuously being depleted," adding, "The market's ability to absorb such imbalances has also been dramatically weakened." He further predicted, "There is a high possibility that the pressure will be reflected more directly in spot prices within the next few weeks," expecting additional upward pressure on oil prices in June and July.

The buffers Wirth referred to include crude oil inventories accumulated prior to the war, releases from the U.S. Strategic Petroleum Reserve (SPR), and supplies of sanctioned crude from Iran, Russia, and Venezuela. These factors have contributed to the slower-than-expected rise in oil prices. However, he indicated that even these buffers are declining rapidly as the war continues. FT reported that the reduction in crude oil supply due to the current conflict amounts to as much as 12 million to 13 million barrels per day.

The intensifying competition among countries to stockpile crude oil in response to the energy crisis could also drive oil prices higher. In addition, the tens of billions of dollars needed to restore damaged Middle Eastern oil and gas infrastructure are expected to further contribute to rising oil prices. However, he added, "In the event of an economic slowdown or recession, the effect of offsetting demand could appear."

On the same day, Neil Chapman, Senior Vice President of ExxonMobil, also emphasized, "We are approaching an unprecedented level of inventory decline," repeating, "It is really, really low." He continued, "We can debate whether we reach that level in two weeks or three weeks, but once we get there, prices will surge."

Senior Vice President Chapman predicted that if inventories hit record lows in the coming weeks, the spot price of Brent crude could soar to 150 to 160 dollars per barrel. As of today, July Brent crude oil, the international benchmark, is trading at around 92 to 93 dollars. Optimism related to a ceasefire agreement has caused prices to fall below the 100-dollar mark.

Similar warnings have been issued in succession. Sultan Al Jaber, CEO of Abu Dhabi National Oil Company (Adnoc), stated at an Atlantic Council event on the 21st, "The closure of the Hormuz Strait has triggered the most severe energy supply shock in history," adding, "So far, more than 1 billion barrels of crude oil supply have disappeared, and with each week the closure continues, about 100 million barrels are additionally removed from the market." He predicted that even if the war ends immediately, it will take at least four months for oil shipments to recover to 80% of normal levels, with full normalization only possible in the first or second quarter of next year.

In contrast, the Donald Trump administration in the United States still maintains that oil prices and inflation will normalize swiftly once the war ends. U.S. Treasury Secretary Scott Bessent said at a White House briefing the previous day that oil and gas prices could "fall very quickly" after the war with Iran ends. He added, "After that, the oil market will be in a very well-supplied state."

This content was produced with the assistance of AI translation services.