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Mike Wirth, Chevron chair and CEO, said the impact that the Iran war has had on energy markets has left things “somewhat fragile and uncertain.”
Wirth told Fox News’s Maria Bartiromo on “Sunday Morning Futures” on Friday in an interview aired Sunday about risks to all the paths of transit for oil exports, specifically the Strait of Hormuz and the Red Sea. Wirth said that some of the “challenges have expanded” despite “pretty strong” demand.
“And so, inventories have been drawn down around the world, whether it’s strategic stocks or commercial stocks, and the situation remains somewhat fragile and uncertain,” he continued.
Wirth said that he believes the industry has “done well” with the help of the U.S. having “stepped up to be part of the answer here” when it comes to oil production.
“Longer term, I think you will see some changes in the system,” he added before referring to discussions held about developing a pipeline to the Mediterranean Sea. This pipeline would be in response to Iran’s closure of the Strait of Hormuz, where roughly 20 percent of the world’s oil comes from, and the Houthi blockade on the Red Sea keeping around 5 percent of the world’s oil stranded.
“I think the unfortunate thing is that energy assets have been targeted in this conflict, and what that means is it degrades the capacity of the energy system to meet global demand, and how quickly that comes back will be one of the things that determines when markets actually get back to some sort of a new equilibrium,” Wirth said.
Oil manufacturers have looked at establishing a pipeline across Saudi Arabia and evading the Houthi blockade in the Red Sea. This path goes from Yanbu, Saudi Arabia, through to the Suez Canal in Egypt to the Mediterranean, sailing around Africa past the Cape of Good Hope and off to Asia.
The challenge here is if enough oil can move quickly enough through the canal to meet global demands, Homayoun Falakshahi, head of crude oil analysis at Kpler, told Al Jazeera last month.
Iran’s closure of the Strait of Hormuz has caused gas prices to soar since the war began on Feb. 28. The national average for gas in the U.S. reached $4.10 on Sunday, according to AAA — more than $1 higher than when the war began.
The Trump administration is looking to reopen closed oil refineries, specifically the St. Croix refinery built to refine Venezuelan oil, a White House official confirmed with The Hill last week. Three industry executives told Politico that the White House has talked about reopening refineries from the Virgin Islands to California.
The St. Croix refinery shut down indefinitely in 2021 after the Environmental Protection Agency ordered it to shut down for 60 days, saying its oil releases and air pollution posed an “imminent risk to public health.”
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