Global Oil Industry Leaders Sound the Alarm: Iran War Will Damage the World Economy

Eastern Time Monday, top executives from the world’s leading oil companies and energy ministers from various countries gathered in Houston to attend the annual high-level energy industry conference, CERAWeek.

At the conference, many industry leaders expressed growing concerns about rising oil prices, warning that the war with Iran could cause long-term damage to the global economy.

Despite this, U.S. Energy Secretary Chris Wirth continued to emphasize the necessity of the war and downplayed the severity of the oil price surge crisis.

Over 10,000 Participants Attend the Energy Industry Event

This Monday, more than 10,000 attendees from over 80 countries gathered at the CERAWeek annual conference, marking the second time in the past five years that the event has been held amid significant global energy disruptions.

In 2022, the CERAWeek conference was also held against the backdrop of major global energy disruptions—just weeks after the outbreak of the Russia-Ukraine conflict, which also caused oil prices to soar.

This week’s conference, however, took place amid a broader energy disruption triggered by the Iran war. This drew significant attention, with many industry professionals and officials actively participating, to the point that some attendees couldn’t even enter the banquet hall to hear specific speakers.

During the conference, speeches from major oil giants all expressed a shared concern about the surge in oil prices: worry.

Industry Leaders Share Concerns

Sultan Al Jaber, CEO of Abu Dhabi National Oil Company (ADNOC), warned that rising oil prices are slowing global economic growth.

“This raises the cost of living for the most vulnerable and slows economic growth worldwide. From factories to farms to households around the world, the toll is increasing daily,” Jaber said.

Ben Marshall, President and CEO of Vitol Americas, warned that if oil prices reach $120 per barrel, the world will face serious demand destruction—earlier this March, Brent futures briefly surged to $119 per barrel, approaching what he called the “alert level.”

Mike Wirth, CEO of Chevron, stated at the conference, “Getting out of this situation will take time.” He pointed out that the closure of the Strait of Hormuz has caused tight energy market supplies, but long-term oil prices have not yet fully reflected this.

“The consequences are not only high energy prices but also disruptions to other supply chains,” said Patrick Pouyanne, CEO of TotalEnergies. He also highlighted interruptions in helium transportation in the Middle East, which is vital for semiconductors and medical supplies.

Takehiko Matsuo, Deputy Minister for International Affairs at Japan’s Ministry of Economy, Trade and Industry, also attended the conference. He mentioned that member countries of the International Energy Agency previously released a record 400 million barrels of strategic reserves to stabilize oil prices, but this did not calm market sentiment.

Japan relies heavily on imports; the oil reserves released by Japan this time amount to about 80 million barrels, ranking second after the U.S. with 172 million barrels.

U.S. Energy Secretary: No Choice but to Act

Despite many concerns, U.S. Energy Secretary Wirth insisted at the conference that oil prices have not risen enough to impact demand.

Currently, U.S. gasoline prices have surged over 30%, reaching the highest levels since 2022, with an average price of about $4 per gallon. Wirth stated that the U.S. has no choice but to go to war with Iran.

Wirth said the U.S. government has taken measures to stabilize the energy market, including releasing oil from strategic reserves and assisting in transporting oil to specific locations.

This war has already caused the largest disruption in energy supply in history, as the vital Strait of Hormuz shipping route has been effectively blocked, and attacks in the Middle East have caused long-term damage to the infrastructure of several countries.

Although there was some sell-off in oil prices following former President Trump’s statement on Monday that he was negotiating with Iranian officials to end the conflict, as of press time, the global benchmark Brent crude oil price remained around $99 per barrel.

(Source: Caixin)