American oil executives say a global fuel crisis has already begun, driven by a prolonged blockade of the Strait of Hormuz and a strike on Saudi Arabia's East-West pipeline, The Wall Street Journal reported, citing statements from industry figures.
Commercial fuel stocks around the world have been shrinking for more than six months, and strategic oil reserves are not unlimited, according to the report. The Middle East conflict also halted the East-West pipeline, which normally allows Saudi oil to bypass the Strait of Hormuz, creating a shortfall of at least 2.5 million barrels a day in an already strained global oil market.
Chevron chief executive Mike Wirth said the market's ability to offset supply disruptions and rising prices is nearly exhausted. He said the system no longer has the spare capacity that existed at the start of the conflict with Iran.
Middle East supply disruptions
The Strait of Hormuz is a narrow waterway between Iran and Oman through which roughly a fifth of the world's oil passes by tanker, making it one of the most important chokepoints in global energy trade. Chevron is one of the largest oil companies in the United States.
Experts cited in the report said the situation has been made worse by attacks on tankers, by China increasing its oil purchases after drawing down its own reserves, and by falling diesel supplies caused by refinery shutdowns in the Middle East and Ukraine.
Brent price forecast
Analysts at the American investment bank Goldman Sachs expect the price of Brent crude, the benchmark for North Sea oil used to price much of the world's crude, to exceed 120 dollars a barrel in the foreseeable future amid renewed escalation in the Middle East.
The report said the consequences of a recent attack on the East-West pipeline by Houthi rebels from Yemen's Ansar Allah movement could prove more serious than expected. Repairs to the pipeline, a key energy facility in a region gripped by war, could take up to eight weeks.
