Several oil industry executives have reportedly privately warned the White House that the ongoing closure of the Strait of Hormuz is straining global oil inventories and could lead to gas price spikes in the coming weeks.
For more than three months, Americans have been forced to confront high gas prices as a result of President Donald Trump’s war with Iran. The conflict has disrupted global oil production because Iran has effectively closed the Strait of Hormuz, through which roughly 34 percent of the world’s oil passes.
But executives from unidentified oil companies have warned senior administration officials in recent weeks that they’re concerned prices could rise further as a result of diminishing oil supplies, four executives told Politico.
“We’re at dangerously low levels already,” one unnamed industry executive told Politico. “We have shared those concerns at the highest levels of government about what’s coming in mid-to-late June. … I hope they are paying attention to inventories right now. You’re hitting tank bottom.”
A White House official denied Politico’s reporting, claiming oil executives have not spoken with senior officials on oil reserve issues.
Already, Chevron CEO and Chairman Mike Wirth publicly expressed concerns over the level of inventories, telling the “Bloomberg Talks” podcast last week that “the trajectory of these inventories in the data… is concerning.”
As of June 4, the national average for a gallon of regular fuel was $4.21, according to AAA. That is slightly lower than prices were a month ago, but more than $1 more than prices one year ago.
White House Spokesperson Taylor Rogers said in a statement that “President Trump and his energy team anticipated short-term market disruptions, communicated them openly to the American people, and implemented an aggressive plan to mitigate any impacts.”
The administration has taken several steps to cushion the impact of oil disruptions in the Strait of Hormuz, releasing 172 million barrels of oil from reserves, working with U.S. companies to tap Venezuela’s oil production, issuing temporary authorizations for the sale of Russian and Iranian oil, invoking the Defense Production Act to allow for offshore crude oil production in California, and more.
“President Trump will never allow Iran to possess a nuclear weapon, and he will continue to advance America’s core national security interests,” Rogers added, claiming that gas prices would drop again when the war ends.
Jim Burkhard, the global head of crude oil research at S&P Global Energy, told the Washington Post that while “shock absorbers have been surprisingly effective… their ability to continue to absorb the shock is diminishing.”
