Key insights
- Chevron's CEO warns of impending physical oil supply shortages due to the potential closure of the Strait of Hormuz amidst a hypothetical US-Israeli war with Iran. This disruption could trigger economic contractions, starting in Asia, as demand struggles to adjust to constrained supply. This geopolitical risk poses a significant bearish threat to US equities due to potential energy price spikes and broader economic instability.
HOUSTON, May 4 (Reuters) - Chevron Chairman and CEO Mike Wirth said on Monday that physical shortages in oil supply would begin appearing around the world because of the closure of the Strait of Hormuz, through which 20% of global crude supply passes.
Economies will begin shrinking, first in Asia, as demand adjusts to meet supply while the strait remains closed because of the U.S.-Israeli war with Iran, Wirth said during a discussion sponsored by the Milken Institute.
(Reporting by Erwin Seba; Editing by Nia Williams)