Live updates: Follow the latest news on US-Iran war
With the Iran war presenting itself as the greatest oil supply disruption in history, a sobering view of the conflict has emerged at a major energy conference in Houston.
Now in its third week, the war has drastically reduced the world's energy supply through the effective closure of the Strait of Hormuz, a key waterway for global oil shipping, and repeated attacks on civilian energy infrastructure across the Gulf.
Former US defence secretary Jim Mattis told delegates at CERAWeek by S&P Global in Texas on Monday that the US-Israeli strategic objective showed that even a militarily weakened enemy – in this case Iran – still has cards to play.
“And they played the Strait of Hormuz card,” he told a crowded ballroom in central Houston.
About 10,000 industry leaders and government officials from 80 countries were expected to touch down in the city this week for the annual energy conference. Panel discussions have often turned towards the conflict gripping the Middle East.
In recent weeks, Qatar halted its liquefied natural gas (LNG) capacity after Iran struck its Ras Laffan industrial hub; the UAE suspended operations at the Shah gas plant in Abu Dhabi; and refineries in Saudi Arabia and Kuwait were struck by Iran in response to Israeli strikes on the South Pars gasfield.
“It will take time to come out of this,” Chevron chief executive Mike Wirth said.
Looking towards the Strait of Hormuz, he added that tightness in the market has not been fully priced in. “There are very real, physical manifestations of the closure of the Strait of Hormuz that are working their way around the world and through the system that I don’t think are fully priced into the futures curves on oil,” he told the conference.
In Washington, US President Donald Trump appeared to suggest there was movement towards a resolution to he conflict, suggesting Washington and Tehran had reached 15 points of agreement and that he has decided to pause attacks on Iranian energy sites for five days.
“If it goes well, we’re going to end up with settling this," Mr Trump said. “Otherwise, we just keep bombing our little hearts out.”
Oil prices retreated more than 10 per cent following his remarks, although Brent crude was still trading at $99 a barrel. A report from Oxford Economics forecast Brent prices to average at $114 a barrel in the second quarter.
former US defencesecretary
Meanwhile, in Houston, TotalEnergies' Patrick Pouyanne warned that a disruption lasting more than four months would pose a systemic risk to the global economy. “The consequence is not only high energy prices. It will damage other supply chains,” he told the conference, pointing to helium, where Qatar accounts for one third of the world's supply.
Continued disruptions in the strait could also lead to higher costs for food production.
Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc, called the strait's effective closure an act of “economic terrorism against every nation”.
“When Hormuz is squeezed, the pressure is immediately felt around the world,” he said.
Underlining the travel disruptions facing Gulf nations, Dr Al Jaber delivered his remarks by video. Travel disruptions also affected speaking engagements of other Gulf delegates including Aramco chief executive Amin Nasser, Reuters reported. Kuwait Petroleum Company chief executive Sheikh Nawaf Al Sabah is also due to address the conference by video because of travel disruptions, a source said.
Initial assessments from the International Monetary Fund anticipate the war's impact to affect both inflation and growth for the global economy.
Mr Mattis said that, while the war has led to the effective destruction of the Iranian navy and the Tehran regime facing an existential crisis, it is the global economy that is most at risk.
When Mr Trump first launched co-ordinated strikes with Israel on February 28, Mr Mattis said it was Tehran that was being hit hardest.
“They still are getting pummelled, but effectively it is the global economy where the risk is now the highest,” Mr Mattis said. "Not the regime, not the stability of Iran, but the global economy."
A report from Goldman Sachs analysts last week estimated the combined effect of oil and gas production losses and a decline in economic activity could result in Gulf economies contracting in 2026 more than at any other time in the past 30 years.
“The economic miracle that has been created across the Gulf is being threatened, and its longevity is being put in question,” Suzanne Maloney, vice president and director of the Foreign Policy programme at the Brookings Institution, said during her panel session with Mr Mattis.
Meanwhile, in seeking to play down the conflict, US Energy Secretary Chris Wright argued the war was an issue “we simply couldn't kick down the road”.
“This is a regime that has used its increasing power to trouble energy markets and destabilise its region,” Mr Wright said. The Trump administration feared Tehran obtaining a nuclear weapon, he added.
He brushed off concerns about current high prices, saying “markets do what markets do”. He added that "prices have not risen high enough yet to drive meaningful demand destruction".
America's senior energy official also pointed to efforts the Trump administration has made to calm energy markets, including releasing 172 million barrels from the nation's strategic petroleum reserve.
Mr Wright said the US would release between one million and 1.5 million barrels per day from its emergency stockpile to address the supply disruption, adding that releases could reach up to about three million bpd.
The move was part of a broader agreement by International Energy Agency countries to bring 400 million barrels of oil into the market. Mr Wright said the US began releasing oil from its emergency stockpile on Friday. “Japan has also moved quickly, some nations a little bit more slowly,” he added.
Nilanjana Gupta contributed to this report
