Several oil industry executives have 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, according to a report from Politico.
For more than three months, Americans have faced 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.
Executives from unidentified oil companies have warned senior administration officials in recent weeks that they’re concerned prices could rise further due to diminishing oil supplies. “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 the report, claiming oil executives have not spoken with senior officials on oil reserve issues. However, Chevron CEO and Chairman Mike Wirth publicly expressed concerns over inventory levels, 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 a month ago, but more than $1 higher than one year ago. White House Spokesperson Taylor Rogers stated that “President Trump and his energy team anticipated short-term market disruptions” and implemented an aggressive plan to mitigate impacts, including releasing 172 million barrels of oil from reserves and working with companies to tap Venezuela’s oil production.
Jim Burkhard, 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.”
