The global crude oil market presents a eerie calmness amidst the smoke of gunpowder in the Red Sea. However, Michael Wirth, CEO of oil giant Chevron, said that if the tense situation leads to a serious interruption in supply in the Middle East, prices may change rapidly.
He was worried during a media interview on the sidelines of the Davos forum, stating that the situation was very serious and was still getting worse. The risk is real, but it is surprising that crude oil prices can still remain below $73 per barrel.
He also pointed out that Chevron does not intend to abandon the Red Sea and is working closely with the US Navy's Fifth Fleet to continue transporting crude oil from the Middle East. But the situation is constantly changing, and the company must observe it very carefully.
On Tuesday, sources from another oil giant, Shell, revealed that the company has suspended the transportation of goods through the Red Sea. In addition, BP and some major shipping companies have already announced a suspension of traffic in the Red Sea.
The possibility of doubling oil prices
On Tuesday, US National Security Advisor Sullivan stated that it is expected that the Houser militants will continue to attempt to undermine shipping safety in the Red Sea, and the US reserves the right to take further action. He also stated that he will take a stronger stance towards the forces supported by Iran.
Crude oil market and geopolitical analysts believe that if tensions in the Middle East escalate into regional conflicts, preventing crude oil from flowing out of the Strait of Hormuz, energy supply will face the highest risk.
According to data from trade analysis firm Kpler, approximately 7 million barrels of crude oil and petroleum products pass through the Red Sea every day, while 18 million barrels pass through the Strait of Hormuz. Goldman Sachs also warns that if the Strait of Hormuz is interrupted, global oil prices will double.
This concern is not unfounded. Wirth pointed out that two Chevron merchant ships were attacked by the Iranian Navy last year, one of which was seized and taken to Iranian ports, while the other was hit by a four hour fire that lasted until the US Navy's rescue efforts were able to stop.