Oil industry executives announced on Tuesday (October 5) at the "Intelligence Energy Summit" in London that shipping bottlenecks, a sharp decline in refinery production, and withdrawals from storage that will take years to replenish will keep global oil prices high until after the end of this year.
Disruptions in the Strait of Hormuz and Their Consequences
Following the onset of the U.S. and Israeli regime's war against Iran in late February, traffic and exports from the Strait of Hormuz, one of the world's vital shipping chokepoints, have been disrupted. These disruptions have posed serious challenges to crude oil and fuel exports.
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Tengku Muhammad Taufiq, CEO of Malaysia's Petronas, stated at the summit: "In my opinion, we will witness a chaotic and turbulent situation in the market until the end of the year and perhaps until 2027." These remarks reflect deep concerns about the future of the oil market.
Supply Decrease and Demand Increase
Amin Nasser, CEO of Saudi Arabia's state oil company Aramco, emphasized in his first speech after the war against Iran that replenishing global storage, from which emergency withdrawals have been made, could take up to two years. He said: "The reality is that as long as the traffic disruptions from the Strait of Hormuz are not resolved and market confidence does not return, pressure on both sides of the chain will intensify."
It is worth noting that since the beginning of the conflict, about 3 billion barrels of oil have been removed from global supply, and 1 billion barrels have been withdrawn from the world's strategic crude oil reserves. This supply reduction has severely impacted prices and created a critical situation.
Sheikh Nawaf Al-Sabah, CEO of Kuwait Oil Company, announced that Kuwait's crude oil exports this year are about 1 million barrels per day, while the country's daily production has decreased from about 2.6 million barrels to 2 million barrels. He also pointed out a daily shortage of 6 million barrels of petroleum products in global markets.
Meanwhile, Ryan Lance, CEO of ConocoPhillips in the U.S., predicted that the recovery from the current global oil demand decline due to the crisis could last until 2028 or 2029. He added: "The floor price for U.S. WTI crude oil is expected to rise to about $70 per barrel." These predictions indicate that the oil market continues to face many challenges, and its future remains uncertain.
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