Exxon sounds alarm on oil inventories, sees Brent hitting $160
Exxon Mobil's Senior Vice President warns that global oil inventories are approaching critical operational levels, as the closure of the Strait of Hormuz continues to be partially masked by commercial and strategic reserves.
While Brent remains contained below $100 per barrel, Exxon Mobil is alerting the market to a growing disconnect between the apparent calm in the futures market and the mounting tension in physical trading. Speaking at a Bernstein conference in New York, Neil Chapman, Senior Vice President of the US major, warned that global inventories of crude, gasoline, diesel and jet fuel are approaching "unprecedented" lows following weeks of drawdowns intended to offset the closure of the Strait of Hormuz.
He says that physical Brent prices could surge towards $150 to $160 per barrel once inventories hit their operational floor. This threshold could be reached within the next two to three weeks, although the exact timing remains difficult to predict. "Once that point is reached, prices have only one way to go," Chapman summarized, explaining that rebalancing would then occur through demand destruction, as prices become prohibitive for certain consumers.
The paradox lies in the fact that Brent futures remain near $94, supported by hopes of a deal between Washington and Tehran to reopen the Strait of Hormuz. However, this easing primarily reflects diplomatic expectations, while physical flows remain severely disrupted. According to the International Energy Agency, the closure of the strait has already deprived the market of over one billion barrels of oil, marking the largest oil supply interruption ever recorded.
This tension has so far been cushioned by commercial stocks, Western strategic reserves, and certain flows of sanctioned oil. However, Exxon believes that these buffers are being exhausted. Chevron offered a similar diagnosis, with CEO Mike Wirth judging that pressures are likely to be transmitted more directly to physical prices in June and July.
Exxon Mobil Corporation is an integrated fuels, lubricants and chemical company. Its principal business involves exploration for, and production of, crude oil and natural gas; the manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and a wide variety of specialty products; and pursuit of lower-emission and other new business opportunities, including carbon capture and storage, hydrogen, lower-emission fuels, Proxxima systems, carbon materials, and lithium. Its Upstream segment explores for and produces crude oil and natural gas. The Energy Products, Chemical Products, and Specialty Products segments manufacture and sell petroleum products and petrochemicals. The Energy Products segment includes fuels, aromatics, and catalysts and licensing. The Chemical Products segment consists of olefins, polyolefins, and intermediates. Specialty Products segment includes finished lubricants, basestocks and waxes, synthetics, and elastomers and resins.
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