Oil executives say global fuel crisis has arrived

Diesel hits record $6.23 a gallon amid 19% crude climb

American oil executives warned for months that the prolonged closure of the Strait of Hormuz would eventually produce a fuel crisis. According to The Wall Street Journal, they now say that moment has arrived: commercial fuel stocks around the world have been depleting for more than six months, and strategic crude reserves cannot be tapped much further.

Last week’s attack on Saudi Arabia’s East-West pipeline pushed remaining buffers past their limits. Houthi militants launched strikes from Yemen that damaged the East-West pipeline stretching from the Abqaiq oil field to Yanbu al-Bahr, a major Saudi port city on the Red Sea. The attack shut down a crude artery that bypassed the Strait of Hormuz, stranding at least 2.5 million barrels a day from an already tight global oil market, analysts estimate.

Chevron Chief Executive Mike Wirth, speaking Friday at an energy conference in Austin, Texas, said: “All these mechanisms helped to mitigate the price and supply risk. Those have largely now played out, and we don’t have nearly the buffers in the system that we did when it began.” Asked where prices could go from here, Wirth said it was hard to predict but added: “I wish I could tell you that I saw some reason why things would ease, but it’s difficult right now to see that happen.”

The price impact is visible at U.S. fuel stations. Diesel has soared to a record $6.23 a gallon, and gasoline prices — which had slipped below $4 a gallon earlier this summer — have rebounded to $4.32. U.S. crude prices have climbed 19% over the past three weeks to trade near $101 a barrel as attacks across the Middle East multiply. Iran has continued to target oil tankers traversing the Strait, even after President Trump and his lieutenants boasted about escorting several vessels undetected through the waterway. Some energy analysts told the Journal they have been fielding investor questions about when consumers pinched by the high prices will start pulling back on new purchases.

The Trump administration has repeatedly promised Americans that prices at the pump would decline and that energy flows out of the Middle East would keep increasing. Interior Secretary Doug Burgum, speaking at a Houston G-20 event on Monday, told reporters: “If you want to write about the prices, make sure you include the word ‘temporary’ because this is a temporary disruption.” Burgum also said “the prices in the prior administration were this high anyway” and that Americans would have paid those prices permanently under former President Joe Biden, whom Burgum accused of “pursuing a policy of energy subtraction and shutting down refineries.”

Burgum rejected persistent speculation that the administration is seriously weighing a temporary ban on U.S. exports of refined products such as diesel. “We will do anything that helps the price at home,” Burgum said. “But we’re also going to be smart about it, and not just have some idea that if we stop exporting, that somehow magically is going to help the prices.” The White House sees two larger levers it can pull: boosting production in Venezuela and increasing U.S. fuel-making capacity. In recent months, U.S. officials have focused on striking deals that are expected to bolster Venezuela’s oil production. In early September, U.S. officials met with refining executives to discuss raising the nation’s fuel-making capacity, and they are “pleased with progress thus far on both fronts,” a senior U.S. official told the Journal.

Tensions between the administration and industry executives have been visible in recent weeks. Wirth said Friday that he had not spoken to President Trump since Aug. 3, when the president posted on Truth Social that the CEO had not credited the administration for the oil industry’s fortunes and called on Chevron and oil companies to bring “consumer (retail!) Oil Prices DOWN, NOW!” Some CEOs and energy advisers told the Journal they have grown alarmed in recent weeks as the conflict has picked back up, with ships and energy infrastructure being targeted in both directions. Energy executives and White House officials said they have maintained a continuing dialogue about the energy situation since the conflict began, with CEOs including Wirth speaking frequently to Energy Secretary Chris Wright.

In March, the chief executives of the three largest U.S. oil companies — ExxonMobil, Chevron and ConocoPhillips — had warned Trump officials, including Burgum and Wright, that a prolonged closure of the Strait could lead to a shortfall in refined products such as diesel, the Journal previously reported. Some executives have been privately critical of the administration’s handling of the conflict, according to the report.

China has also contributed to the global supply pinch. The world’s largest oil importer had for months relied on its own stockpiles for nearly half of its daily consumption, providing a reprieve for oil markets. In recent weeks, however, it has resumed bigger purchases from international suppliers, analysts said, removing that cushion from the global balance.

Diesel supplies are particularly tight. Pickering Energy Partners founder Dan Pickering pointed to refinery outages following conflicts in the Middle East and Russia, and to expected demand increases as farmers using diesel-powered heavy equipment enter harvest season. “Diesel has no easy solution,” Pickering said. Trump has said Ukraine must halt strikes on Russia that endanger global diesel supplies.

Trump has said he expects the war to last until the November midterm elections, but investors have told the Journal they believe the war will go well beyond that. Pickering called the Trump timeline “the signal this is going to stretch on.” Trump has vowed to impose economic pressure on Iran and ruled out sending boots on the ground. Wil VanLoh, founder and CEO of Quantum Capital Group, speaking at the Austin conference, said: “The advantage in most negotiations usually goes to the side that has time on their side, and is willing to be patient.” Iran, VanLoh said, “is willing to suffer. Their people have already suffered a lot for many decades.”

With the buffer mechanisms exhausted and no resolution to the Iran war in sight, the executives who gathered in Austin said the fuel crisis they had warned of for months has now arrived.