Key Takeaways
- Mike Wirth, Chevron’s CEO, highlighted that oil futures fail to capture the full physical impact of the Strait of Hormuz shutdown
- Between 6.5 and 9 million barrels per day of oil production remain offline across the Middle East region
- WTI crude surged to $101 per barrel before retreating to approximately $87 following Trump’s announcement of diplomatic engagement with Iran
- Asian markets confront mounting energy shortages, with diesel and jet fuel supplies already tightening significantly
- Goldman Sachs adjusted its 2026 WTI projection upward to $79 per barrel from $72, anticipating extended conflict duration
Mike Wirth, CEO of Chevron (CVX), delivered a stark message to attendees at S&P Global’s CERAWeek conference in Houston on Monday: the energy markets are underestimating the gravity of the current crisis.
Wirth addressed the conference audience, emphasizing that tangible disruptions from the Strait of Hormuz closure are already rippling through global energy networks — yet crude oil futures fail to account for this reality.
“There are real physical manifestations from the closure of the Strait of Hormuz that are working their way around the world and through the system that I don’t think are fully priced into the futures curve on oil,” Wirth said.
He cautioned that futures traders are reacting to “any kind of perception” and characterized the current market environment as “uncertain,” “unpredictable,” and “volatile.”
CVX stock climbed 1.73% during the trading session, despite a sharp decline in crude prices. Brent crude slid 12% to $98.95 per barrel during March 23 afternoon trading, while WTI decreased 11% to $87.73. The decline followed President Trump’s disclosure of diplomatic discussions with Iran and his decision to postpone threatened military action for a minimum of five days.
Physical Supply Disruption Takes Hold
The data supporting Wirth’s assessment paints a stark picture. S&P Global Energy estimates that roughly 6.5 to 7 million barrels of daily oil supply have been taken offline throughout the Middle East. This figure is projected to reach 8 or 9 million barrels in the coming days.
Approximately 80% of oil typically transported through the Strait of Hormuz heads to Asian destinations, and the region now confronts what Kurt Barrow of S&P Global Energy described as an “availability crisis.”
“Some countries will have to go without oil,” Barrow said. “There’s no model for this.”
Wirth pointed to tightening conditions in diesel and jet fuel markets. Restoration of production capacity will require substantial time, even assuming a swift ceasefire. Industry specialists indicate recovery could span weeks, months, or potentially years depending on facility damage.
“Some of these facilities suffered damage and in some cases reportedly significant damage. How quickly that production can come back on-line is an uncertainty that we are going to have to deal with,” Wirth said.
Market Pricing Lags Behind Physical Realities
The WTI futures curve presently indicates prices near $82 per barrel for July delivery, declining to the $73 range by December. Market expectations keep oil in the $70s throughout most of 2027. Prior to the conflict outbreak, those same futures contracts traded in the $50–60s range.
Wirth’s central argument centers on the likelihood that even these elevated price levels remain insufficient given the infrastructure damage and the magnitude of supply disruption.
WTI reached $101 per barrel while Brent climbed to $113 late Sunday amid concerns regarding possible U.S. military action against Iranian power infrastructure. Prices retreated significantly Monday morning following Trump’s announcement postponing such strikes.
Goldman Sachs updated its 2026 WTI oil price projection to $79 per barrel from $72, operating under the assumption that Strait of Hormuz oil shipments will continue at approximately 5% of normal capacity for a minimum of two additional weeks.
CVX holds a consensus Strong Buy rating from 21 Wall Street analysts, comprising 16 Buy and five Hold recommendations. The average price target stands at $197.25.
