U.S. oil industry executives delivered a warning to the Trump administration that the energy crisis triggered by the war with Iran is likely to worsen. They warned that if the blockade of the Strait of Hormuz drags on, volatility in the global energy market will grow and oil prices will continue to rise.
According to the Wall Street Journal (WSJ) on the 15th, CEOs of major U.S. oil corporations, including ExxonMobil, Chevron and ConocoPhillips, said at a recent White House meeting with Energy Minister Chris Wright and Interior Minister Doug Burgum that disruptions to energy shipments through the Strait of Hormuz would shock the global market.
ExxonMobil CEO Darren Woods told government officials that an influx of speculative money could drive oil prices to spike even more sharply than now. He noted that beyond simple crude supply chain disruptions, a severe shortage of refined fuels such as gasoline and diesel could occur. Chevron CEO Mike Wirth and ConocoPhillips CEO Ryan Lance likewise voiced concern about the scale of potential supply disruptions.
The White House is reviewing several policy tools to stabilize oil prices. It is considering a large-scale release from the Strategic Petroleum Reserve (SPR) and further easing of sanctions on Russian crude. It is also looking at a temporary waiver of laws that restrict crude shipments between U.S. ports.
Interior Minister Doug Burgum emphasized that the administration is working "around the clock" with energy corporations to stabilize the market.
However, the oil industry says the policies under discussion are merely stopgaps and that reopening the Strait of Hormuz, the fundamental solution, is urgent.
Oil industry officials predicted that if the Strait of Hormuz, which handles about 20% of the world's energy supply, remains closed, high oil prices will bring global economic growth to a halt.
Elevation Resources CEO Stephen Pruett said, "The global economy doesn't need to bear $120 per Barrel oil," adding, "Oil at this level will ultimately damage the economy."