Key Takeaways
- Chevron’s CEO Mike Wirth believes oil futures markets are failing to price in the actual physical consequences of the Strait of Hormuz shutdown
- Daily oil supply disruptions in the Middle East range between 6.5 and 9 million barrels
- WTI crude touched $101 per barrel before retreating to approximately $87 following President Trump’s announcement of negotiations with Iran
- Asian markets are experiencing severe energy supply constraints, particularly in diesel and jet fuel sectors
- Goldman Sachs adjusted its 2026 WTI projection upward to $79 from $72 per barrel, anticipating extended conflict duration
At S&P Global’s CERAWeek conference in Houston on Monday, Chevron (CVX) CEO Mike Wirth delivered a stark message that resonated throughout the energy sector: the oil markets are dramatically underestimating the crisis at hand.
Wirth emphasized to attendees that while the physical ramifications of the Strait of Hormuz shutdown are actively disrupting global energy flows, crude oil futures pricing fails to account for this emerging reality.
“There are real physical manifestations from the closure of the Strait of Hormuz that are working their way around the world and through the system that I don’t think are fully priced into the futures curve on oil,” Wirth stated.
He characterized the market as driven by “any kind of perception” and described current conditions as “uncertain,” “unpredictable,” and “volatile.”
CVX stock posted a 1.73% gain despite falling crude prices. On March 23 afternoon trading, Brent crude declined 12% to $98.95 per barrel, while WTI slid 11% to $87.73. The selloff followed President Trump’s declaration of diplomatic engagement with Iran and a minimum five-day pause on threatened military action.
Supply Disruption Impact Already Materializing
The data supporting Wirth’s concerns paints a concerning picture. S&P Global Energy estimates that roughly 6.5 to 7 million barrels per day of oil supply are currently unavailable from Middle Eastern sources. Projections indicate this figure could escalate to 8 or 9 million barrels in the coming days.
Approximately 80% of Strait of Hormuz oil flows typically head to Asian destinations, where Kurt Barrow of S&P Global Energy describes an emerging “availability crisis.”
“Some countries will have to go without oil,” Barrow warned. “There’s no model for this.”
Wirth noted that diesel and jet fuel markets are already demonstrating supply constraints. Even with a rapid diplomatic resolution, production restoration will be time-consuming. Industry experts project recovery timeframes ranging from weeks to potentially years depending on damage severity.
“Some of these facilities suffered damage and in some cases reportedly significant damage. How quickly that production can come back on-line is an uncertainty that we are going to have to deal with,” Wirth explained.
Market Pricing Lags Behind Physical Reality
Current WTI futures contracts indicate prices near $82 per barrel for July delivery, declining to approximately $73 by year-end December. Forward curves project oil remaining in the $70 range throughout most of 2027. Pre-conflict, these same contracts traded between $50 and $60.
Wirth’s argument centers on the likelihood that even these elevated price levels inadequately reflect the infrastructure damage and unprecedented supply removal from global markets.
Late Sunday, WTI momentarily surged to $101 per barrel while Brent reached $113 amid fears of potential U.S. military strikes targeting Iranian energy infrastructure. Prices retreated sharply Monday morning following Trump’s strike postponement announcement.
Goldman Sachs recently upgraded its 2026 WTI price forecast to $79 per barrel from $72, operating under the assumption that Strait of Hormuz shipments will continue at approximately 5% of normal capacity for a minimum of two additional weeks.
Among 21 Wall Street analysts covering CVX, the consensus rating stands at Strong Buy, comprising 16 Buy ratings and five Hold recommendations. The average analyst price target is set at $197.25.
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