Energy markets aren’t adequately pricing the oil supply shock caused by the war in Iran, Chevron CEO Mike Wirth said Monday at S&P Global’s annual CERAWeek conference in Houston. Based on the amount of supply that has been taken offline and the amount of infrastructure damage, crude futures should be higher, according to Wirth.
“There are real physical manifestations from the closure of the Strait of Hormuz that are working their way around the world and through the system that I don’t think are fully priced into the futures curve on oil,” Wirth said.
The futures curve for West Texas Intermediate shows expected crude prices to be about $82 per barrel in July and falling to $73 by December. The market has priced oil to remain in the $70s for most of 2027. Before the conflict, those futures were in the $50-60s range.
With limited understanding of the war’s timeline or course, futures traders are making moves based on “any kind of perception,” Wirth said. “They are uncertain. They are unpredictable. They are volatile.”
Oil futures have swung wildly in day-to-day trading in the past few weeks. WTI crude hit $101 a barrel and Brent crude shot up to $113 late Sunday night on concerns about President Donald Trump’s threatened strikes on Iranian power plants. WTI fell to $86 and Brent to $98 Monday morning after Trump postponed those strikes and said the U.S. was in talks with Iran about a cease-fire. Iran denies it is negotiating with the U.S.
The futures curve reflects what financial traders are preparing for in the months and years to come. But oil shortages are already showing up. There is tightness of supply in the diesel and jet fuel markets, Wirth noted, and Asia is starting to face “real concerns” around energy supply.
According to S&P Global Energy, about 6.5-7 million barrels of oil are currently offline in the Middle East, but that number will increase to 8 or 9 million barrels within several days. Some 80% of the oil that normally flows through the strait goes to Asia.
Kurt Barrow, who heads oil, fuel, and chemicals at S&P Global Energy, told Barron’s the world is entering “an availability crisis” in which some countries will have to go without oil.
“There’s no model for this,” he said.
Even if the war ends soon, it could take awhile to restore some energy supply. Experts say it could take weeks, months, or even years in some cases to restart production. Wirth said that timeline is increasingly a concern.
“Some of these facilities suffered damage and in some cases reportedly significant damage. How quickly that production can come back on-line is an uncertainty that we are going to have to deal with as we go forward,” he said.
Goldman Sachs revised its oil price forecast on Sunday to $79 a barrel for WTI from $72 a barrel for 2026 on the assumption the war might be longer than initially expected. It made its forecast based on the calculation that oil shipments through the Strait of Hormuz would remain at about 5% its normal level for another two weeks.
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