Oil Executives Warn of Global Fuel Crisis, Buffer Mechanisms Exhausted
According to The Wall Street Journal, executives from several oil companies, including Chevron, ExxonMobil, Shell, BP, ConocoPhillips, and TotalEnergies, collectively stated that the global fuel crisis, which has been a concern for months, "has arrived," as various mechanisms previously used to buffer price and supply risks have been largely exhausted.
Chevron CEO Mike Wirth stated at an energy conference in Austin that, "The mechanisms that helped alleviate price and supply risks in the past are now basically depleted." An unnamed energy consultant added that this is a signal that "conflicts will persist for a long time."
Currently, U.S. crude oil prices have risen to around $101 per barrel, an increase of about 19% over three weeks; the national average price for diesel has reached a historic high of $6.23 per gallon (which later rose to $6.505); gasoline prices have rebounded to about $4.30 per gallon, after briefly falling below $4 during the summer.
The supply side continues to deteriorate: U.S. commercial fuel inventories have been consumed for more than six consecutive months, and the strategic petroleum reserve is nearing its usable limit; last week, Saudi Arabia's "East-West crude oil pipeline" was attacked, forcing the closure of this alternative route that was originally intended to bypass the risks of the Strait of Hormuz, resulting in about 2.5 million barrels of crude oil being stranded daily, with recovery expected to take weeks; combined with the dual blockades of the Strait of Hormuz and the Bab-el-Mandeb Strait, it is estimated that about 39% of global maritime trade volume and 31% of transport throughput are directly impacted.
U.S. Interior Secretary Doug Burgum characterized the current situation as a "temporary" shock, calling for Venezuela to increase oil production and for U.S. refiners to expand capacity as a response; Trump has publicly demanded lower oil prices while vowing to apply more economic pressure on Iran, but has refused to send additional U.S. ground troops to the region; it is reported that Trump has not directly communicated with Wirth since early August. Market participants expect that this conflict is likely to continue until after the midterm elections in November.
The International Energy Agency has characterized this round of supply disruptions as "the largest supply disruption in the history of the global oil market," with its Executive Director Fatih Birol calling it "the most severe energy security challenge in human history." The IEA has previously coordinated member countries to initiate a joint release of 400 million barrels from strategic oil reserves to alleviate pressure on the spot market. The sectors most directly impacted are end consumers and transportation-intensive industries, whose fuel procurement costs have risen sharply; meanwhile, U.S. domestic refiners and producers, who have local production advantages and are less affected by sanctions, as well as Venezuela, which intends to expand exports to fill the gap, have become relatively beneficial players in this price increase cycle.
Analysts compare the current situation to the oil crisis of the 1970s and the European energy crisis triggered by the Russia-Ukraine conflict in 2022, believing that the absolute scale of this supply shock has surpassed those two historical crises due to the combined factors of the blockade of the Strait of Hormuz, the obstruction of the Bab-el-Mandeb Strait, and the destruction of Saudi Arabia's main pipeline.
Source: Public Information
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Chevron CEO Wirth's statement is not an isolated event. Reviewing the complete timeline of the current fuel crisis due to the Iran conflict: Brent crude oil started at around $80 in early March when the conflict broke out, peaking at $118 by the end of March; it fell to $70 in early July amid ceasefire rumors; but after the conflict reignited at the end of July, prices rebounded above $100, climbing further to $109 by early September. This "conflict easing—price drop—conflict resurgence—price rebound" zigzag trajectory closely resembles the price fluctuations of European natural gas at the beginning of the Russia-Ukraine conflict in 2022, indicating that the market had been pricing in the possibility of a "quick end to the conflict," while Wirth's statement marks a shift in industry expectations from "short-term shock" to "structural, long-term shock."
The allocation of funds and resources has become fully strained—U.S. commercial fuel inventories have been consumed for over six months, the strategic petroleum reserve is nearing its usable limit, and the IEA has previously coordinated member countries to initiate a joint release of 400 million barrels, one of the largest coordinated strategic reserve actions in recent years. Meanwhile, the U.S. government is directing its response towards increasing production in Venezuela and expanding domestic refining capacity—this echoes early U.S. military actions and regime change in Venezuela during the early stages of this conflict, indicating that Washington is re-incorporating Venezuela into its global oil supply strategy, attempting to offset the ongoing damage to the Middle Eastern supply chain with increased supply from another oil-producing country.
The IEA has characterized this round of supply disruptions as "the largest supply disruption in history" and compared it to the oil crisis of the 1970s—when Arab countries imposed an oil embargo on the West, directly causing oil prices to quadruple within months and prompting long-term changes in the establishment of strategic oil reserve systems in various countries. The current phase of the industry differs significantly from the 1970s in that the sources of shock are more diverse—not just a political embargo from a single oil-producing country group, but simultaneous physical disruptions from the blockade of the Strait of Hormuz, obstruction of the Bab-el-Mandeb Strait, and destruction of Saudi Arabia's main pipeline. It is estimated that the combined impact on global maritime trade volume has reached 39%, a proportion that exceeds the supply loss scale during the 1970s embargo period.
This essentially represents a dual reconstruction of regulation and the industrial chain—on one hand, governments are forced to re-activate long-idled strategic energy emergency mechanisms (such as the U.S. utilizing strategic reserves, multi-country coordinated releases, and some countries triggering emergency laws not used for decades), with energy security reverting from being a "market commodity" back to being positioned as a "national security asset"; on the other hand, at the industrial chain level, buyers are being forced to shift from a "long-term contract model reliant on a single chokepoint" to a "diversified, high-security inventory, high-premium spot procurement model." Mechanistically, this switch, once it occurs, is difficult to reverse—even if this round of conflict ultimately cools down, the diversified layouts and higher security inventories established by governments and enterprises to mitigate supply chain concentration risks are likely to become permanent costs, embedded in the global energy pricing system for the long term.
ABAB News · Cognitive Law
- The day the buffering mechanisms are exhausted, the crisis truly begins.
- Strategic reserves are meant to be unused, but also to be usable.
- Once the safety margin is breached, it becomes a new cost.