Chevron CEO Mike Wirth on Tuesday voiced support for governments to release emergency stocks of oil to offset supply fears sparked by Russia’s invasion of Ukraine.
“I think a coordinated response from multiple countries could help in the short term,” Wirth said in response to a question from CNN during a briefing with reporters. “Certainly we have seen markets worrying about supply and reliability of supply.”
Brent oil prices closed above $100 a barrel on Monday for the first time since 2014. U.S. crude and Brent crude surged another 5% on Tuesday even as the International Energy Agency meets to discuss a response to the Russian-Ukrainian crisis.
US President Joe Biden indicated last week that the United States was ready to release more oil from the Strategic Petroleum Reserve, the national stockpile of oil that was tapped in November in response to high prices.
“The Strategic Petroleum Reserve was intended for use in the event of an actual supply disruption or high risk of a supply disruption,” Wirth said. “Unlike other times where we’ve seen it used perhaps more due to price concerns but no real supply issues, in this case the use of the reserve would be in line with this for which it was established.”
However, the Chevron CEO urged the federal government to take broader action to encourage long-term oil and natural gas development.
The invasion of Ukraine has raised concerns about a supply disruption from Russia, the world’s second-largest oil producer. Wirth expressed confidence that this will not happen.
“I have seen nothing to indicate that Russia’s intentions or the intentions of the governments involved in the sanctions would be to restrict the supply of oil,” Wirth said. “In fact, quite the opposite. It seems to me that people have been careful to signal that their intention is to try to maintain the energy supply of a world that needs it.
Chevron said its only real exposure to Russia is through the Caspian Pipeline Consortium, a pipeline system that brings crude oil from Western Kazakhstan and Russian oil producers. The Russian government and Chevron own stakes in the company, according to its website.
“We have had no indication from any government that the Caspian Pipeline Consortium’s operations are likely to be interrupted,” Wirth said, adding that it is a major source of supply, carrying over million barrels a day out of landlocked Kazakhstan.
High oil prices pushed up prices in gas pump to seven-year highs. The national average for regular gasoline rose to $3.62 on Tuesday, up about 9 cents in a week and 24 cents in a month, according to AAA.
At some point, energy prices could get so high that they erode consumer demand and slow down the economy as a whole.
“We have a strong economic recovery underway globally. So far, economies have been able to adjust to high energy prices and continue to generate growth,” Wirth said. “I think there’s probably a limit to that.”