Energy industry experts and market analysts are cautioning about a probable surge in oil and gas prices due to depleting reserves and the ongoing closure of the Strait of Hormuz. The cost of Brent crude futures stood at $98.20 US per barrel on Wednesday, with projections indicating a potential rise to $150 US or higher in the near future. This escalation is primarily attributed to diminishing expectations for a U.S.-Iran agreement to reopen the Strait, coupled with consistent demand in certain markets amid rapidly depleting reserves.
Neil Chapman, a senior vice president at ExxonMobil, addressed a conference in New York, highlighting the unprecedented decrease in inventory levels. He emphasized the likelihood of prices skyrocketing once inventory levels hit critically low points, with estimations ranging from $150 US to $160 US.
Chevron CEO Mike Wirth, in a recent interview with Bloomberg Talks, also expressed apprehension regarding dwindling reserve levels. Wirth underscored the gradual depletion of inventories on products and crude oil globally, pointing out that inventories could potentially reach a critical low point soon.
In response to the Middle East conflict, 32 International Energy Agency members agreed in March to release 400 million barrels of oil from their emergency reserves. The U.S. Strategic Petroleum Reserve, as per the Department of Energy’s latest report, currently holds 357.1 million barrels of oil, a decrease of over 50 million barrels since the conflict began in February 2026. This marks the lowest level since December 2023, nearing figures from the early 1980s when the reserve was established.
While acknowledging the challenging market conditions, Chevron’s Wirth refrained from terming the situation a crisis, emphasizing the resilience of the market. The uncertainty surrounding the reopening of the Strait of Hormuz, a vital oil shipping route, continues to impact global oil prices, with recent geopolitical tensions further exacerbating the situation.
Industry analysts caution that oil and gas prices are likely to remain elevated at least until 2027 due to the complexities associated with reopening the Strait. The lack of confidence in swift resolutions and the persistent geopolitical uncertainties contribute to the ongoing price volatility in the energy market.
Despite the looming price hikes, consumer demand for fuel remains robust in Canada, even as supply constraints persist. The upcoming summer season, typically characterized by peak gasoline demand, could witness further price escalations, potentially leading to gas prices exceeding $2 per liter in Canada.
The ramifications of the Strait’s closure have been relatively contained in North America, with most affected oil shipments destined for Asia. Nevertheless, the potential economic benefits of higher oil prices are overshadowed by the adverse impact on consumers, raising concerns about escalating inflation and potential interest rate hikes by central banks.
In conclusion, the energy sector braces for continued price fluctuations and challenges ahead, as global energy markets navigate through the uncertainties triggered by geopolitical tensions and supply-demand dynamics.
[Source](https://www.cbc.ca/news/business/higher-oil-gas-prices-industry-analysts-9.7222066)