War raises risks.. Is the world entering a new phase of the oil crisis?
The CEOs of the world’s largest oil and gas companies sent troubling messages this week about the impact of the Iranian war on energy supplies and its long-term repercussions on the global economy. American crude oil increased by 49% to reach 99.64 per barrel since the US-Israeli attack on Iran on February 28. As for Brent crude prices, they jumped by more than 55% to reach $112.57 per barrel.
Worrying messages
The executives met in Houston, Texas, to attend the annual energy conference. "Cerawick" Organized by the Foundation "S&P Global" to assess the war situation, warning that the market does not reflect the extent of the disruption to oil and gas supplies.
Warning of depleting reserves
said Ryan Lance, CEO of "ConocoPhillips"Closing the Strait of Hormuz and restricting between 8 and 10 million barrels per day of crude oil, in addition to about 20% of the liquefied natural gas market, will create "Big repercussions" On Global Market.
Lance added that his company is communicating with the Trump administration to provide military protection for American oil assets, as Conoco is investing hundreds of millions of dollars in the largest liquefied gas complex in the world, which was subjected to drone strikes. He explained that the company had to evacuate a number of its non-essential employees during the past two weeks.
Closing the Strait of Hormuz undermines supply chains
For his part, Sheikh Nawaf Al-Sabah, CEO of the Kuwait Petroleum Corporation, said that Iran effectively imposed an economic blockade on oil producers by closing Strait of Hormuz, adding: "This is not only an attack on the Gulf, but an attack that is draining the global economy". Al-Sabah warned that war would be hers "Sequential repercussions" On the global economy.
Al-Sabah continued: "The costs of this war are not limited to geographical borders in this region, but rather extend to the entire supply chain"
Market Uncertainty
Mike Wirth, CEO of Chevron, believes that the physical supply of oil is much lower than futures prices indicate. He added that the market reacts accordingly "Scarce information" and"Misperceptions"
Wirth said: "There are tangible and visible effects of the closure of the Strait of Hormuz, rippling around the world and across the system, and I do not think they are fully priced in oil futures.".
The CEO of "ConocoPhillips": "The minimum oil price is likely to rise"noting that prices are unlikely to fall to pre-war levels anytime soon, despite reassurances from the Trump administration."
Consumer Prices
Patrick Pouyanne, CEO of Total Energy, revealed that jet fuel prices jumped to $200 per barrel, and diesel fuel to $160 per barrel, as a result of the war. He pointed out that China imposed a ban on exports of petroleum products, and Thailand began rationing gasoline. Boyan added that "The crisis is really starting to affect customers"expressing his hope that the war will not last long, otherwise the consequences will be severe "Very dramatic".
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