Global oil markets may be underestimating the full impact of the ongoing disruptions in the Strait of Hormuz, with ExxonMobil Chairman and CEO Darren Woods warning that the current price levels do not yet reflect the scale of the supply shock.
According to Woods, the global crude market has been temporarily cushioned by existing inventories and oil already in transit, masking the severity of the disruption caused by the Iran war and restricted tanker movement through the key shipping route.
He cautioned that if the situation persists, oil prices could see another leg higher as these buffers begin to deplete. The unprecedented shock has not yet been fully registered in the market, he said, pointing to a potential delayed reaction in crude pricing.
The Strait of Hormuz, a critical chokepoint through which nearly a fifth of global oil supply passes, has seen significant disruption amid geopolitical tensions. Even partial restrictions have historically led to sharp price volatility, with the current crisis already triggering one of the largest supply shocks in recent history.
Despite this, oil prices have not surged as sharply as initially feared. Analysts attribute this to the release of strategic reserves, stockpiled inventories, and expectations of potential de-escalation. However, market participants are increasingly wary that this resilience may be temporary.
Woods also highlighted operational risks for oil companies, noting that ExxonMobil’s production in the Middle East could fall by as much as 750,000 barrels per day if disruptions continue.
Even if the Strait reopens, normalisation of supply chains could take one to two months, with additional demand arising from the need to replenish depleted inventories potentially putting further upward pressure on prices.
The warning comes at a time when global markets remain in a wait-and-watch mode, balancing hopes of a diplomatic resolution against the risk of prolonged supply constraints.
With tanker flows still uncertain and geopolitical tensions unresolved, the oil market could be facing a delayed but sharper pricing adjustment in the weeks ahead.
