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Two of America's most powerful oil companies delivered back-to-back warnings last week that the world is running out of the crude stockpiles that have so far prevented the Iran war from triggering an energy crisis of the most acute kind. Executives at both Exxon Mobil and Chevron told a Wall Street conference that inventories are approaching a threshold beyond which oil prices have only one direction to travel.
Exxon Warns Oil Inventories Are Approaching 'Unheard Of' Lows
The more alarming of the two assessments came from Exxon Mobil senior vice president Neil Chapman, who told the conference hosted by investment bank Bernstein in New York that the pace at which global crude stocks are falling has no modern precedent.
"We're approaching unheard of inventory levels," Chapman said.
He was direct about where that trajectory ends, suggesting that the only uncertainty is the precise timing of the breaking point, not the breaking point itself.
"I mean really, really low levels," Chapman said. "You can debate whether that's going to hit, those really low levels, in two weeks or three weeks. Once you get to that point, then you'll see price shoot up."
Chapman said oil executives have been raising this concern for two months, warning that crude futures prices have consistently failed to reflect the true scale of the supply disruption. That reckoning, he suggested, is now weeks away.
"I don't know, whether it's two to three weeks or three to four weeks," Chapman said. "What I'm really saying is, once you get to the minimum inventory levels and all-time low inventory levels, there's only one way to go. That's the situation."
Brent Crude Could Surge to $150 to $160 a Barrel When Stockpiles Collapse
Chapman put a specific price on the inflection point. When inventories reach their all-time low, the price of physical Brent oil cargoes could surge to between $150 and $160 a barrel, he said. At that level, the market would eventually find a new equilibrium, but through a mechanism that carries its own significant economic cost.
"When the price gets to a certain level, demand destruction brings it back into balance," he said.
Brent crude futures for July delivery closed below $94 a barrel on Thursday as investors held on to hopes that a settlement between the US and Iran could reopen the Strait of Hormuz. Brent, the international benchmark, was down almost 1 per cent at $93.71 a barrel, while West Texas Intermediate traded just below $90.
Chevron Chief Sees Sharp Price Pressure Building Through June and July
Chevron chief executive Mike Wirth offered a parallel analysis at the same Bernstein conference, warning that the market's ability to hold prices steady is eroding at an accelerating pace.
"The buffers and the shock absorbers are being steadily drawn down, and the ability for the market to absorb this imbalance is drastically diminished today versus where we started," Wirth said.
With those buffers nearly gone, he said, the imbalance between global supply and demand will begin feeding directly into prices in the weeks ahead.
"Over the next few weeks, we're likely to see those pressures flow through more directly to physical prices and there's more upwards pressure that I would expect as we get into June and certainly into July," he said.
Iran War Has Caused the Largest Oil Supply Disruption in History
The warnings from both companies reflect a market under a degree of strain that has no recent parallel. Iran's closure of the Strait of Hormuz, the narrow channel through which roughly a fifth of the world's crude oil flows, has removed between 12 million and 13 million barrels of oil a day from global markets over three months of conflict.
The International Energy Agency has described it as the largest oil supply disruption in history, estimating that the closure has cost the market more than a billion barrels in total. The IEA warned earlier this month that inventories are being depleted at a record pace. In March, the organisation's member countries agreed to release a record 400 million barrels from their strategic reserves to limit the damage.
Wirth said crude prices had remained below what many had forecast because three factors had acted as cushions: higher-than-normal crude stocks held before the war began, drawdowns from the US Strategic Petroleum Reserve, and continued flows of sanctioned oil from Iran, Russia and Venezuela. All three, he said, are now running low.
Chapman put the same point more bluntly, acknowledging that while oil stockpiles had mitigated the disruption so far, the strategy "can't last forever."
Full Oil Flows Through the Strait of Hormuz Are Unlikely Before 2027
Both companies' warnings sit within a broader industry consensus that even a diplomatic resolution to the Iran conflict would not produce an immediate recovery in supply. Physical damage to oil and gas infrastructure across the Middle East would cost tens of billions of dollars to repair, Wirth said, and the timeline for restoring full supply flows through the Strait of Hormuz extends well beyond any ceasefire.
Sultan al-Jaber, chief executive of the Abu Dhabi state oil group Adnoc, offered the starkest timeline at an Atlantic Council event on 21 May, warning that a complete restoration of pre-conflict oil flows through the Strait is unlikely even in 2026.
"It will take at least four months to get back to 80 per cent of pre-conflict flows, and full flows will not return before the first or even second quarter of 2027," al-Jaber said.
Governments Face Growing Pressure to Rebuild Strategic Petroleum Reserves
The energy crisis has exposed a structural fragility that the conflict has brought into sharp relief: the degree to which governments have allowed their strategic petroleum reserves to deplete without systematic replenishment between crises. Wirth said the war would compel a fundamental rethink of how policymakers approach energy security.
"The likelihood that another shock is around the corner is something policymakers are going to have to bear in mind . . . how long they want to roll the dice before they refill inventories is a question that I think we're going to see policymakers have to grapple with," he said.
Reserve rebuilding at any meaningful scale would, however, add to market demand at exactly the moment supply is most constrained.
"That's going to put more demand into the market, which is going to put a bit of additional tension on the price," he said.
Recession Risk Grows If the Energy Crisis Persists
Wirth acknowledged that a prolonged period of high oil prices carries systemic economic risks that extend well beyond the energy sector. Sustained price spikes of the kind Chapman forecast for Brent crude could begin suppressing the economic activity that drives demand for oil in the first place, creating conditions for a deeper slowdown.
"If this goes on for long, it tips us into an economic slowdown or a recession, you might have an offset on the demand side, which you can't rule out," Wirth said.
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