Exxon and Chevron Warn Global Oil Inventories Are Plunging Toward Historic Lows

Senior executives from ExxonMobil and Chevron issued a stark warning on Thursday that global crude oil stockpiles are depleting at an unprecedented pace, setting the stage for a potential price shock that could send physical Brent crude soaring to $160 per barrel within weeks.

Speaking at the Bernstein conference in New York, Neil Chapman, ExxonMobil’s senior vice president, said the world is approaching inventory levels that have never been seen before. “We’re approaching unheard of inventory levels. I mean really, really low levels,” Chapman said. “You can debate whether that’s going to hit those really low levels in two weeks or three weeks. Once you get to that point, then you’ll see price shoot up.”

Chapman projected that physical Brent crude could spike to a range of $150 to $160 per barrel once stockpiles bottom out. That would represent a dramatic leap from current levels, with July Brent futures trading below $94 per barrel on Thursday. He expects prices at those thresholds would eventually trigger enough demand destruction to moderate costs.

Chevron CEO Mike Wirth reinforced the grim outlook during the same event. “The buffers and the shock absorbers are being steadily drawn down,” Wirth said, noting that the market’s ability to absorb imbalances has weakened dramatically. He anticipates the pressure will become more directly visible in physical market pricing over the coming weeks, with conditions likely to intensify through June and July.

The buffers Wirth referenced include crude inventories built up before the conflict, releases from the U.S. Strategic Petroleum Reserve, and sanctioned oil supplies from Iran, Russia, and Venezuela. These factors help explain why oil prices have risen more slowly than many expected. But with the conflict dragging on, those cushions are eroding rapidly.

The Hormuz Factor

At the center of the supply crisis is the closure of the Strait of Hormuz. Chapman described it as the most extreme supply disruption ever documented, citing International Energy Agency data. Roughly 14 million barrels per day of Middle Eastern crude production have been stripped from international markets since the strait was blocked.

“They can’t last forever,” Chapman said of existing inventories, which have cushioned the blow so far.

The IEA has designated July and August as the period when market strain will hit maximum severity. Earlier this month, the agency highlighted that global reserves are being depleted at rates without historical precedent. In March alone, IEA member nations released 400 million barrels from strategic reserves to offset the supply gap. The need to replenish those reserves now turns governments into competing buyers in an already tight market.

Sultan Al Jaber, CEO of Abu Dhabi National Oil Company (Adnoc), added his voice to the warnings at an Atlantic Council event on May 21. He said the Hormuz blockade has triggered the most severe energy supply shock in history, with more than one billion barrels of crude supply already erased from the market. Each week the blockade continues, roughly 100 million additional barrels disappear, he said. Even if the war ended immediately, Al Jaber estimated it would take at least four months for crude shipments to return to 80% of normal levels, with full normalization not expected until the first or second quarter of next year.

The Financial Times reported that the supply reduction from the conflict amounts to 12 to 13 million barrels per day.

A Contrast in Views

The dire warnings from oil industry leaders stand in contrast to the stance of the Trump administration. Treasury Secretary Scott Bessent said at a White House briefing earlier this week that oil and gas prices could fall “very rapidly” once the conflict ends. “After that, the oil market will be in a state of very ample supply,” Bessent said.

Futures markets have remained relatively stable so far, with traders apparently pricing in prospects for a diplomatic resolution that would reopen shipping routes through the strait. July Brent futures have retreated below the $100 mark, reflecting some optimism around ceasefire negotiations. But both Chapman and Wirth are signaling that conditions in the physical crude market paint a considerably more alarming picture.

The IEA has marked the coming two-month period as the decisive interval. When crude inventories dwindle to minimal levels, even minor supply interruptions can trigger sharp and prolonged price escalations — precisely the scenario both executives warn is rapidly approaching.

Wider Implications

The intensifying energy crisis could also spark a new wave of strategic stockpiling by governments worldwide, further driving up prices. The hundreds of billions of dollars needed to repair damaged oil and gas infrastructure in the Middle East will add additional upward pressure on crude costs. Wirth acknowledged, however, that an economic slowdown or recession could partially offset demand.

The warnings come as physical crude markets increasingly diverge from futures pricing, with industry leaders emphasizing that the real economy may soon feel the full force of the supply shock that paper markets have so far absorbed.