Exxon warns oil inventories will hit dangerously low levels due to Iran war

ExxonMobil He warned on Thursday that oil inventories will fall to record lows in the coming weeks, causing prices to rise and demand to decline.

“We are approaching unheard of inventory levels,” Exxon Senior Vice President Neil Chapman said at a conference hosted by Bernstein in New York.

“I’m talking about really low levels,” Chapman cautioned. “You can debate whether this will really hit the lows in two weeks or three weeks. Once you get to that point, you’ll see prices rise rapidly.”

The price of physical Brent oil cargoes will rise to $150 to $160 per barrel as inventories reach all-time lows in the coming weeks, the executive said. “Once the price reaches a certain level, demand disappears, bringing it back into balance,” he said.

Brent The closest contract, futures for July delivery, closed below $94 a barrel on Thursday as investors once again held out hope for a deal between the United States and Iran that would reopen the Strait of Hormuz.

According to the International Energy Agency, Iran’s closure of the strait has cost the market more than a billion barrels to date; This was the largest oil supply disruption in history. Chapman said oil stocks have cushioned the impact so far, but “it can’t last forever.”

The IEA warned earlier this month that stocks were being depleted at a record pace. Members of the organization agreed to release a record 400 million barrels in March to cushion the impact of the supply disruption.

Oil industry executives have warned for two months that the crude futures market did not reflect the extent of the disruption triggered by war in the Middle East.

“I don’t know if it’s two to three weeks or three to four weeks,” Chapman said. “What I’m really saying is that when you hit minimum stock levels and all-time low stock levels, there’s only one way to go. That’s the situation.”