Middle East conflict exposes fragile energy markets, Chevron chief warns

London: The global energy system has become more fragile as the Middle East conflict enters its eighth month, with buffers for oil and fuel supplies continuing to shrink, according to Chevron Chief Executive Officer Mike Wirth.

Speaking at the Energy Intelligence Forum in London, Wirth said underlying oil and gas market fundamentals were tightening, leaving the market more vulnerable to supply disruptions.

“The energy system is more fragile today than earlier in the conflict,” Wirth said, adding that the floor under oil prices is gradually rising as supply cushions diminish.

Wirth noted that while Brent crude futures are trading around $100 per barrel, the landed price of physical oil in Asia is currently closer to $150 per barrel, highlighting the divergence between benchmark futures prices and conditions in physical energy markets.

Beyond crude oil, refined fuel markets have also become increasingly tight in recent months, driving gasoline and diesel prices significantly higher than the cost of the crude oil used to produce them.

The surge in fuel costs has prompted governments to consider measures aimed at protecting consumers and industry. Last week, the G7 agreed to release 100 million barrels from strategic crude oil and diesel reserves amid concerns about supply shortages and discussions around potential US export restrictions.

Wirth cautioned against export bans, arguing that restricting supply could worsen market pressures rather than ease them.

“Restricting supply, which an export ban would do, constrains supplies at a time when the world needs them,” he said.

He added that the United States remains closely linked to global energy markets and warned that a diesel export ban may not produce the intended benefits for American consumers.

The comments come as governments and energy companies closely monitor the impact of continued geopolitical tensions on global oil, fuel and energy security.