Some of the world's top oil executives and energy ministers in Houston on Monday expressed growing concern over the long-term effects of the U.S.-Israel war with Iran on the global economy, while the U.S. Energy Secretary Chris Wright downplayed the crisis.
The war has caused one of the biggest disruptions to energy supplies in history after Iran effectively closed the key Strait of Hormuz shipping route and as attacks in the Middle East inflict long-term damage on production infrastructure in several countries. Global benchmark Brent crude was still at $99 a barrel on Monday afternoon, even after a selloff driven by President Donald Trump's remarks that he was in talks with Iranian officials to end the conflict.
"The consequence is not only high energy prices. It will damage other supply chains,” said Patrick Pouyanne, CEO of TotalEnergies TTEF.PA, pointing also to disruptions of helium shipments from the Middle East. Helium is key for semiconductors and medical supplies.
Wright, speaking at the annual CERAWeek conference in Houston, said oil prices had yet to climb high enough to hurt demand. Gasoline prices have soared by more than 30% to their highest level since 2022 at nearly $4 a gallon since the conflict started. But Wright said the U.S. had no choice but to go to war with Iran.
"This is a conflict that we simply couldn't kick down the road," Wright said. He said the administration had taken steps to calm energy markets, including releases from the Strategic Petroleum Reserve and helping route barrels to specific locations in China.
Analysts at JP Morgan, however, said Monday that the shut-ins have already "quickly translated into outright shortages of crude and refined products across Asia."
More than 10,000 attendees from over 80 countries convened at the annual conference, the second time in the last five years the event has occurred in the thick of a major global energy disruption. The event has been so packed on Monday that some attendees were unable to even access the cavernous ballrooms for specific speakers.
The 2022 gathering took place just weeks after Russia's invasion of Ukraine, which also sent oil prices soaring.
Execs Express Alarm
Shortly after Wright spoke, Sultan Al Jaber, CEO of Abu Dhabi's state oil company ADNOC, warned the jump in oil prices was slowing economic growth globally.
"This is raising the cost of living for those who can least afford it and slowing economic growth everywhere. From factories to farms to families around the world, the human cost is mounting by the day," Al Jaber said.
Ben Marshall, president and CEO of trading company Vitol Americas, warned the world would see severe demand destruction if oil reached $120 a barrel. Brent futures briefly surged to $119 a barrel in early March.
The war has effectively shut the Strait of Hormuz, used to transit one-fifth of the world's oil and gas supply, while key infrastructure in the Middle East, including QatarEnergy's massive liquefied natural gas plant, has been hit and will take years to repair. Economists have started to build in worsened inflation as a result of the disruptions, with BNP Paribas boosting its 2026 core inflation outlook to 3.2% from a previous 2.9%.
"It will take time to come out of this," Chevron CEO Mike Wirth said on Monday at the conference. Tightness in the energy market due to the closure of the Strait of Hormuz has not been fully priced into forward oil prices, he said.
The effort by International Energy Agency members to release a record 400 million barrels from strategic reserves was not enough to calm markets, said Takehiko Matsuo, Japan's Vice Minister for International Affairs.
Japan, which relies on imports, contributed some 80 million barrels of oil to that release, second-most behind the United States' 172 million barrels.
(Reuters - Reporting by Shelia Dang, Stephanie Kelly, Georgina McCartney, Arathy Somasekhar and Jarrett Renshaw in Houston , additional reporting by Nicole Jao in New York.)
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