Signs of physical shortages in crude oil are emerging, the chief executive of Chevron warned this week, noting that this will first hit Asian economic growth.
“We will start to see physical shortages,” Mike Wirth said at an event, as quoted by Reuters. “Demand needs to move to meet supply,” Wirth also said, adding, “Economies are going to have to slow.”
The crisis in the Middle East prompted a scramble among energy importers to find alternative supply, with Japan yesterday receiving its first crude shipment from Russia’s Sakhalin Island in two years, and Kpler reporting U.S. oil exports have hit another all-time high since the start of the month. Oil inventories are also being drained at a fast pace.
Wirth said Asian economies are the first to feel the impact of oil shortages on their economic growth, followed by European economies. Asia is most heavily dependent on Middle Eastern oil and gas, with Japan sourcing as much as 95% of its oil imports from the region.
In late April, Goldman Sachs warned that global oil inventories had dropped to an all-time low amid the rush to find oil. At the time, the bank’s commodity analysts said that even if the war between the U.S., Israel, and Iran ended by the end of April, inventories would continue falling. With the end of the war nowhere in sight as May begins, the decline is likely to extend, despite record U.S. exports.
The war has so far cost Middle Eastern producers over 13 million barrels daily in lost output, and that is just crude oil. Exports of crude plus refined products have slumped by an estimated 20 million barrels, the head of the IEA, Fatih Birol, said in April. This week, Goldman again issued a new warning, saying the depletion in global oil stocks is accelerating.
By Irina Slav for Oilprice.com
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