Exxon sees Brent at $150–160 as US inventories hit 22-year low amid supply squeeze – Firstpost

Global oil markets may be heading towards a major supply shock as US crude oil and petroleum product inventories have dropped to their lowest level in 22 years, triggering warnings from some of the world’s biggest energy players that Brent crude prices could surge sharply.

According to the US Energy Information Administration (EIA), combined US crude oil, Strategic Petroleum Reserve (SPR), and petroleum product inventories stood at around 1.57 billion barrels, the lowest level since May 2004. The decline comes as global supply chains remain strained due to disruptions linked to the Middle East crisis and continued pressure on physical oil availability.

Despite these warning signs, Brent crude futures remain below the extreme levels some industry executives are forecasting, creating a gap between what financial markets are pricing and what physical oil traders say they are seeing.

Neil Chapman, Senior Vice President at ExxonMobil, has warned that global inventories are moving towards “really, really low levels” and suggested that physical Brent prices could potentially move towards the $150–160 per barrel range if supply tightness accelerates in the coming weeks.

Chapman argued that the market cannot rely indefinitely on inventory drawdowns to balance lost supply. The concern among oil executives is that emergency reserves and commercial stocks have acted as temporary shock absorbers — but those buffers are gradually shrinking.

A similar warning came from Chevron Chairman and CEO Mike Wirth, who said that while prices around $80 per barrel may represent the lower end of the company’s planning scenarios, geopolitical disruptions could push prices towards much higher levels.

Meanwhile, Tom Baker, Managing Director at Vitol Bahrain, one of the world’s largest independent oil trading houses, highlighted a bigger concern: the physical availability of barrels. According to Baker, the real stress point arrives when buyers urgently need physical oil supplies and those barrels are no longer easily available.

Analysts say the biggest risk lies not only in crude supply but also in refined products such as diesel, jet fuel and gasoline. Unlike crude production, which can sometimes recover faster, rebuilding refined fuel inventories depends on refinery capacity,  creating a longer-lasting bottleneck.

The market divide now comes down to one question: are futures traders pricing a diplomatic solution faster than the physical market can absorb the shortage?

Current oil prices suggest investors expect geopolitical tensions to ease before inventories reach critically low levels. However, executives from ExxonMobil, Chevron and Vitol are pointing towards a different risk — that supply buffers could run out before relief arrives.

Past energy shocks have shown how quickly sentiment can change. During the 2022 Russia-Ukraine crisis, crude prices jumped rapidly after physical supply concerns overtook expectations of a diplomatic resolution.

Some energy experts believe a prolonged disruption could create a much larger spike. Bob McNally, President of Rapidan Energy Group and a former White House energy adviser, has warned that severe supply interruptions could push crude prices dramatically higher.

For now, Brent remains below the extreme forecasts, but the warning from industry insiders is clear: the oil market may look calm on screens, while stress is building underneath in the physical supply chain.