Speaking at S&P Global’s CERAWeek conference, Chevron CEO Mike Wirth said the oil futures market has not fully priced in the scale of the supply disruption caused by the closing of the Strait of Hormuz.
“There are very real, physical manifestations of 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 curves on oil,” Wirth stated.
According to Wirth, the market is trading on “scant information” and “perception,” and the physical supply of oil is tighter than the futures contracts suggest.
“We got a lot of oil and gas now that is not flowing into the market. There really is a difference in terms of physical supply this time versus prior incidents.”
“How quickly that production can actually come back online is an uncertainty that we’re going to have to deal with as we go forward,” Wirth said. “It’s going to take some time to come out of this.”
Wirth’s comments come as Brent climbed above $100 a barrel Tuesday, after plunging by 11% on Monday.
Brent has increased roughly 40% this month.
By CEO NA Editorial Staff
