Energy Chiefs Warn of Lasting Disruption

The leaders of the world’s largest oil and gas companies are delivering a far darker assessment of the Iran war’s supply shock than markets appear to be pricing in. Their message is that the disruption is not a short-lived distortion, but a physically constrained energy crisis with consequences likely to extend across fuel markets, industrial supply chains and corporate planning well beyond the immediate conflict.

At the centre of that warning is the scale of the lost flow. Executives speaking at S&P Global’s CERAWeek conference in Houston argued that the market is underestimating the impact of removing 8 million to 10 million barrels of oil a day and around a fifth of the liquefied natural gas market from normal circulation. The closure of the Strait of Hormuz has effectively choked the main export artery for Gulf producers, leaving companies to contend not only with price volatility but with a deeper problem around physical availability. Shell and Chevron both stressed that tightness in actual supply is more severe than futures pricing suggests, indicating that current market signals may still lag the operational reality.

The disruption is also spreading beyond crude. Executives said shortages in jet fuel are already evident, with diesel expected next and gasoline to follow. Asia is facing immediate strain and Europe is expected to feel the effects by April. TotalEnergies said jet fuel and diesel prices had surged by $200 and $160 per barrel respectively, while restrictions elsewhere are compounding the pressure, including China’s ban on oil product exports and gasoline rationing in Thailand. Cheniere, despite efforts to redirect supply to Asia, is already running at peak production, underlining the limited flexibility available once flows from the Gulf are interrupted.

Senior executives are also preparing for a longer period of elevated prices. US crude has risen 49 per cent to $99.64 per barrel since 28 February, while Brent has climbed more than 55 per cent to $112.57. Even if the war ends, Gulf producers will need months to restore output after shutting wells because of the strait’s closure, and countries are likely to rebuild depleted reserves, keeping pressure on prices.

For corporate leaders, the significance lies in the combination of operational exposure and strategic uncertainty. The issue is no longer whether the conflict unsettles markets, but how long businesses can absorb an energy shock that executives across the sector now describe as materially worse than investors have yet recognised.