Exxon warns oil prices could hit $160 as inventories near record lows

Global crude inventories are weeks from hitting rock bottom, and Exxon warns that will send prices above $150 a barrel.

Exxon Mobil warned that global oil inventories will fall to record lows within weeks as the Strait of Hormuz closure drains stockpiles, threatening a price spike to $160 a barrel that would destroy demand.

"We're approaching unheard of inventory levels — really, really low levels," Neil Chapman, senior vice president at Exxon Mobil, said Thursday at the Bernstein conference in New York. "You can debate whether that's going to hit, those really low levels, in two weeks or three weeks. Once you get to that point, then you'll see price shoot up."

Physical Brent crude could climb to between $150 and $160 a barrel once stockpiles bottom out, Chapman said. July Brent futures settled below $94 a barrel Thursday, while WTI crude traded at $86.72 Friday morning. The gap between futures and physical prices reflects market bets on a diplomatic resolution to the conflict.

The warning comes as the closure of the Strait of Hormuz has removed about 14 million barrels per day of Middle Eastern supply — the largest disruption in history, according to the International Energy Agency. Member countries released 400 million barrels from strategic reserves in March, but those buffers are being consumed at a record pace. Even if a US-Iran deal reopens the strait tomorrow, Chapman estimated it would take four to six weeks for supply to normalize because vessels are positioned in the wrong locations.

Chevron Chief Executive Officer Mike Wirth offered a similar assessment at the same conference. "The buffers and the shock absorbers are being steadily drawn down," Wirth said, adding that the squeeze would show up in physical prices over the coming weeks as summer driving season tightens conditions further.

Futures markets have remained relatively contained, with traders pricing in the possibility of a negotiated settlement. President Donald Trump laid out his demands for an Iran deal on Truth Social this week, and Vice President JD Vance said the US and Iran are close to a nuclear agreement. But Iran has previously rejected key US conditions, including the removal of its enriched uranium, leaving the timeline for any deal uncertain.

The IEA warned earlier this month that inventories are being depleted at an unprecedented rate. The agency's own outlook identified July and August as the period when market conditions would become most acute — a timeline that aligns with Chapman's two-to-three-week window for hitting minimum inventory levels.

Oil prices cannot go below minimum operating levels without damaging infrastructure such as storage tank filters, pipelines and processing equipment, Chapman said. "When the price gets to a certain level, demand destruction brings it back into balance," he said, describing a scenario where $150 oil would erode consumption enough to pull prices back down.

Exxon shares slipped 1.2 percent Friday, extending a seven-day losing streak that has erased all gains posted since the war began. The United States Oil Fund, which tracks WTI crude, fell 2.4 percent and is down 9.5 percent for the week.

The last time a supply shock of this magnitude occurred was during the 1990 Gulf War, when Iraq's invasion of Kuwait removed about 4.3 million barrels per day from markets — less than a third of the current disruption. Brent crude doubled to $40 a barrel at that time before stabilizing after US intervention. The current crisis has already pushed Brent above $110 at its peak in May, and the inventory drain suggests further upside if diplomatic talks stall.

This article is for informational purposes only and does not constitute investment advice.