Chevron CEO Mike Wirth warned at the CERAWeek conference in Houston that oil futures markets underprice supply disruptions from the Strait of Hormuz closure.
Wirth stated physical oil supply is significantly tighter than current futures contracts indicate. He identified a disconnect between market perception and the tangible impact of Middle East conflict.
Oil prices recently declined after the U.S. president delayed military strikes against Iran. Wirth cautioned that significant oil and gas volumes are currently failing to reach the market.
Rebuilding inventories will require substantial time even if the strait reopens. Wirth expects prolonged market tightness and continued price volatility.