Chevron CEO Wirth on Oil Prices, Strait of Hormuz, Venezuela
Speakers
Mike Wirth
— CEO of Chevron
Summary
Chevron CEO Mike Wirth discusses tightening global oil markets, supply disruption risks from the Strait of Hormuz, and low U.S. gasoline/diesel inventories. He warns of potential price increases and details Chevron's production growth, hedging approach, and conditions for investing in Venezuela.
- Global crude oil inventories are drawing and demand remains strong.
- June and July seen as critical months for oil markets.
- Strait of Hormuz disruption could take months to clear and push oil prices very high.
- U.S. gasoline and diesel inventories are at multi-year lows.
- Refineries are running at maximum utilization with seasonal demand rising.
- Chevron's production is growing 7-10% this year.
- Chevron unlikely to invest in Venezuela until fiscal terms are clarified.
- Multiple unreported attacks on vessels in the Strait of Hormuz have occurred.
Trade Ideas
Oil prices likely to rise further.
Global crude oil inventories are drawing down, demand remains strong, and supply disruptions from the Strait of Hormuz pose significant upside risk. Tightening physical markets and the potential for extended transit restrictions could push oil prices much higher than current futures levels. The back end of the futures curve is suppressed by optimistic resolution expectations, but physical reality suggests tightening.
Gasoline/diesel prices risk higher.
U.S. gasoline and diesel inventories are at very low levels (diesel at lowest since 2003), refineries are running near maximum utilization, and seasonal demand is about to rise. This combination creates risk of shortages and upward pressure on prices for both gasoline and diesel in the United States.
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