Oil prices are likely to hit their peak “in the next few weeks” once ship traffic resumes through the Strait of Hormuz, U.S. Department of Energy Secretary Chris Wright said on Monday.
Prices are expected to continue rising until “meaningful” ship traffic resumes through the strait, Wright told the Semafor World Economy Forum in Washington, despite previous comments he made that oil prices would likely come down soon.
“We’re going to see energy prices high – and maybe even rising – until we get meaningful ship traffic through the Strait of Hormuz,” Wright said. “That’ll probably hit the peak oil price at that time. That’s probably sometime in the next few weeks.” U.S. President Donald Trump said on Sunday that the price of oil and gasoline may remain high until November’s midterm elections, a rare admission of the potential political fallout from his decision to attack Iran six weeks ago.
Since the war started on February 28, Iran has largely blocked the Strait of Hormuz for all ships but its own. Tehran has been seeking to make its control of the waterway permanent and possibly collect levies from ships that use it.
In response, the U.S. military has initiated a blockade of the Strait, saying it would extend east to the Gulf of Oman and Arabian Sea after weekend talks to end the conflict collapsed.
Ship-tracking data showed two ships turned around in the strait as the blockade went into effect.
Wright also gave an update on oil production in Venezuela, after the U.S. captured President Nicolas Maduro on January 3, and its interim government led a sweeping reform of the country’s main oil law that was approved later that month, encouraging foreign investment. He said 150 million barrels of Venezuelan oil had been sold since January 3 and that production has ramped up by 25%. Wright had teased that Chevron would be making an announcement that it will ramp up its production in Venezuela. The oil major signed two agreements on Monday, including an asset swap adding an extra heavy crude area to its main project while returning an offshore gas and a crude area, executives and officials said at a separate event.
(Reporting by Valerie Volcovici in Washington; Editing by Matthew Lewis and Lincoln Feast.)