Barrel at $160: Exxon and Chevron warned of oil jumping to 'a different level'

World oil prices in just a few weeks may soar to a "fundamentally different level" due to the critical depletion of reserves, top managers of ExxonMobil and Chevron said at an investment conference in New York. The assessments of American oilmen turned out to be tougher than the recent warnings of the International Energy Agency (IEA), which expected the market to enter the "red zone" only in July-August, notes Oil & Gas Journal.

So far, the market has managed to mitigate the consequences of the loss of 14 million barrels per day due to the war with Iran: the release of oil from commercial and strategic government reserves helped to temporarily offset this shortage, recognized at the Bernstein Strategic Decisions conference Chevron CEO Mike Wirth and ExxonMobil Senior Vice President Neil Chapman. However, these reserves are now steadily declining, and soon the drop in Middle East supplies could fully affect prices, Wirth said.

"In the coming weeks, we will likely see these pressures more directly affecting the cost of actual supplies. I expect even more upward pressure on prices as we get into June and certainly July," an industry magazine quoted the Chevron chief as saying.

Oil inventories are approaching unprecedented lows, ExxonMobil's Chapman agreed. "I mean really, really low inventory levels. You can debate whether those lows will be reached in two or three weeks. Once we get past that point, prices will take off sharply. Most estimated models show that Brent will jump to $150-160," the top manager said. Such a jump from the current $90 per barrel will provoke a sharp drop in demand, which will eventually pull prices back down, he added.

Oil ends the month with a record drop since 2020 - Brent quotes fell by almost 20% in Ma, Bloomberg writes. Investors are counting on the resumption of supplies through the Strait of Hormuz, but U.S. President Donald Trump has not yet approved the terms of a peace deal with Tehran, and the key disagreements around sanctions and the Iranian nuclear program remain unresolved. Moreover, even in the case of successful negotiations, the actual return of raw materials to the market will take months: it will require demining the water area, restarting stopped fields and restoring damaged infrastructure, the agency notes.

A surge in oil prices may put an end to the "Ormuz yo-yo" - a situation when Brent and WTI quotations were kept in a narrow corridor due to multidirectional factors: the upward trend from supply shortages was regularly disrupted and compensated for by news about the progress of the ceasefire negotiations. At the same time, the very fact of a price shock in case of a prolonged closure of the strait is no longer controversial, only the question of timing remains open, states Oil & Gas Journal.

This article was AI-translated and verified by a human editor