Chevron Corp CVX-N chief executive Michael Wirth said on Wednesday he expected oil and motor fuel prices to stay high but cautioned against limiting fuel exports to guarantee U.S. supplies.
The CEO of the second-largest U.S. oil producer also expects Russian oil volumes now reaching the global market to decline in the coming months as sanctions, tanker insurance costs and the departure of Western oilfield service firms weigh on exports.
The White House has not ruled out restrictions on fuel exports to ease soaring domestic prices, the U.S. Department of Energy said last week. Global supplies for refined products are tight, in part due to sanctions imposed on Russia after its invasion of Ukraine and the closing of refineries.
“Restricting exports would be in my opinion an unwise move,” Wirth said at Bernstein’s Annual Strategic Decisions conference. “But I think it is something you can’t rule out.”
Wirth predicted fuel prices and refining margins will rise further as China eases its COVID lockdowns, as international travel improves and fewer Russia barrels reach the market, possibly causing shortages.
“Somewhere in the world in the next few months you’ll start to see product shortages materialize,” said Wirth. “I think Europe is the obvious place.”
He said the United States was also vulnerable if hurricanes affect production this summer.
While incremental oil supply could spur an eventual U.S. lifting of sanctions against oil producers Venezuela and Iran, it might not be “a determinant factor,” he said.
Chevron is not lobbying for a removal of sanctions against Venezuela, where it is the last remaining U.S. producer, Wirth said, describing the country as having been “challenging for a couple of decades.”
The CEO did not rule out the potential for disruptions facing Chevron’s oil production in Kazakhstan, from where its oil moves through a pipeline that crosses Russian territory, saying that “anything that involves Russia carries a different level of concern today than it once did.”
Wirth predicted European Union sanctions on Russia and, more importantly, that European insurance companies refusing to insure oil tankers carrying Russian oil will cause those oil flows to ebb.
“You will see over balance of this year that Russian production will gradually ramp down as it gets harder to move it and (storage) tanks in Russia fill up.”
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