The energy system is more fragile today than earlier in the US-Israeli war, while the oil price floor gets gradually higher, Chevron CEO Mike Wirth said on Tuesday, as buffers for oil and fuel supply thin.
As the conflict runs into its eighth month the underlying fundamentals of the oil and gas market are becoming tighter, Wirth said at the Energy Intelligence Forum in London.
He added that the landed price of physical oil in Asia is currently closer to $150 per barrel than $100, where Brent oil futures are trading.
As well as strong physical crude prices, the world has in recent months faced increasing tightness of refined products markets, driving prices of key fuels such as gasoline and diesel much higher than the underlying crude they are made from.
That has pushed governments to consider measures to shield consumers and industry from soaring fuel costs, including a 100 million barrel crude and diesel strategic reserve release agreed by the G7 last week, amid threats of a potential US ban on exports.
“Restricting supply, which an export ban would do… constrains supplies at the time when the world needs them. The US is not independent of world markets,” Wirth said, adding that a diesel ban might not have the desired effect of helping US consumers with the midterm elections in focus.
(Reporting by Stephanie Kelly, Shadia Nasralla and Robert Harvey; Editing by Emelia Sithole-Matarise and Louise Heavens)