HOUSTON – The escalating conflict between the U.S. And Iran cast a long shadow over CERAWeek, the annual energy industry gathering held in Houston this week. While U.S. Secretary Chris Wright attempted to reassure attendees that the disruptions to global oil markets would be temporary, a chorus of energy CEOs and analysts painted a far more uncertain picture. The immediate concern centers on the closure of the Strait of Hormuz, a critical waterway for global oil transport, now effectively blocked, impacting roughly a fifth of the world’s oil supply.
The situation is particularly acute given that current market prices, according to several industry leaders, don’t fully reflect the severity of the supply constraints. This disconnect between price and reality is fueling anxieties about potential energy shortages and the broader economic consequences of a prolonged conflict. The discussions at CERAWeek, attended by over 10,000 industry professionals, highlighted a growing divergence between the administration’s optimistic outlook and the more cautious assessments of those directly involved in the energy sector.
Chevron CEO Mike Wirth articulated the prevailing sentiment among many attendees, stating that “physical prices and physical supplies would reflect a tighter market than I think the forward curve reflects.” This suggests that the futures market, which predicts future oil prices, is underestimating the immediate impact of the Hormuz closure and the resulting supply squeeze. The International Energy Agency (IEA) has echoed these concerns, warning that the current disruptions are more significant than those experienced during the oil crises of the 1970s.
A Disruption Unlike Recent Crises
The scale of the current disruption is what sets it apart, according to several analysts. Wirth emphasized that the supply issues stemming from the U.S.-Iran conflict are more severe than those following Russia’s invasion of Ukraine in 2022. “We’ve got a lot of oil and gas now that is not flowing into the market,” he explained, “and so there really is a difference in terms of physical supply this time versus what we’ve seen in prior incidents.” This points to a more fundamental challenge than geopolitical risk premiums factored into prices after the Ukraine invasion.
Paul Sankey, an oil analyst with Oliver Wyman who previously worked at the IEA during the first Gulf War, offered a stark assessment. He stated, “The situation is extremely grave, as I would describe it,” adding that the world is only beginning to feel the effects of potential energy shortages. “Every day that passes, the shortage is going to get worse,” Sankey warned, drawing parallels to the 1973 oil crisis – a period marked by significant economic upheaval and widespread fuel rationing.
Natalie Weber / Houston Public Media
Winners and Losers in a Tightening Market
The impact of the conflict isn’t uniform across the energy landscape. Texas-based companies, largely focused on domestic production, could potentially benefit from higher prices, whereas this is not guaranteed. The Texas Tribune reports that the extent of this benefit remains uncertain, dependent on the duration and escalation of the conflict. However, for Houston-based multinational corporations with significant investments in the Middle East, the risks appear to outweigh the potential gains. The Houston Chronicle detailed how threats to production in the region could negate any positive effects of rising oil prices.
ConocoPhillips CEO Ryan Lance highlighted the challenges faced by companies with operations in the region, specifically mentioning investments in Qatar. He revealed that the company has been forced to evacuate non-essential staff and has requested protection from the Trump administration for U.S. Assets in the area. “We’ve had to evacuate a number of our staff – our non-essential staff,” Lance said. “That’s been a chore over the last couple of weeks as well. And, you look [at] what’s going to happen in the markets, it’s a little bit difficult to assess.”
Long-Term Implications and a Rising Price Floor
Beyond the immediate crisis, several executives believe the conflict will fundamentally alter the oil market. Lance suggested that the conflict will likely raise the baseline price of oil, even after a resolution is reached. He noted that the industry had been grappling with lower prices earlier in the year due to an oversupply, but the current situation is shifting that dynamic. “I think we’re all trying to assess what the long-term implications are and what sets the mid-cycle price coming out of this when the conflict is over with,” Lance said. “And clearly, I think the floor probably has to rise and the slope of the curve is probably going to increase.”
Shell CEO Wael Sawan echoed this sentiment, emphasizing the require for long-term strategic thinking. “What I maintain saying to my team is, ‘We need our people to deal with the here and now. But we also need to be thinking three months out, 12 months out, and eventually five [to] ten years out, when we think about the broader energy system and the longer-term implications of the current crisis towards that,’” he said.
The discussions at CERAWeek underscored a growing recognition that the energy landscape is becoming increasingly complex and unpredictable. While the immediate focus remains on mitigating the impact of the U.S.-Iran conflict, industry leaders are also preparing for a future characterized by heightened geopolitical risk and the need for greater resilience in the global energy system.
The U.S. Energy Information Administration is scheduled to release its weekly petroleum status report on April 3, 2026, which will provide updated data on oil inventories and market conditions. This report will be closely watched by industry analysts and policymakers as they assess the evolving impact of the conflict on global energy markets.
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