ExxonMobil senior vice president Neil Chapman warned on Thursday that crude prices could jump to $150 to $160 a barrel within two or three weeks if inventories keep falling to what he called unheard-of levels. Speaking at the Bernstein Conference in New York, he said the move could come fast once supply cushions are gone.
Chapman’s warning lands at a moment when oil has been moving lower, not higher. Dated crude had slipped from a monthly average of $117 in April to near $103 in May after news of progress in a U.S.-Iran peace deal, even though it had been hovering near $75 a barrel before the U.S. and Israel launched a bombing campaign on Iran in late February. The shift is why traders and fuel buyers are watching his remarks closely now.
He tied the risk to shrinking stockpiles across the market. Commercial inventories of crude oil, liquids, gasoline, diesel and jet fuel have all run down, he said, and releases from strategic petroleum reserves by Western countries have helped blunt the pressure on prices. Chapman said the market is approaching really low levels and that once inventories hit them, prices would shoot up.
“I mean really, really low levels,” he said, adding that the market could reach that point in two weeks or three weeks. “Once you get to that point, then you’ll see prices shoot up.” He said dated Brent could “shoot up… up to $150, $160,” and noted that crude trading in the $90 to $110 range for the past six weeks has been supported by drawing down inventories. “It can’t last forever,” he said.
The warning also came on the same day Exxon shareholders approved a plan to move the company’s legal home from New Jersey to Texas, a separate decision that underscored how much attention the company was drawing on Thursday. For consumers, the immediate question is whether the inventory draw Chapman described is close enough to force a price reset before the end of the month. That is the gap the market still has to close.
