- Chevron CEO Michael Wirth downplayed the prospect of $100 oil in a CNBC interview.
- Wirth said the energy market has moved past peak oil concerns to a new "era of abundance."
- The CEO offered supportive words to companies looking to become more sustainable.
Between a drone attack on Saudi oil facilities, attacks on oil vessels in the Strait of Hormuz, and a tense standoff between the U.S. and Iran, oil prices should have spiked substantially higher, right? Wrong, at least according to Chevron CEO Michael Wirth.
‘Era Of Abundance’
The global oil market has undergone a dramatic shift over the past decade from peak oil concerns to a new “era of abundance,” Wirth told CNBC in an interview from the sidelines of the World Economic Forum. This implies Middle East tensions and other geopolitical headwinds mean less to the commodity’s volatility and price movement.
Even when oil experiences short bursts of volatility, it has proven to be short-lived. For example, the drone attack on Saudi Aramco’s oil facilities essentially knocked out nearly 6 million barrels of oil from the global supply. Oil prices soared 15% but gave back all gains over the subsequent days. Future prices for oil delivery in a few years were nearly unaffected which suggests any concern investors had been very short-term in nature.
$100 Oil A ‘Long Time’ Away
The U.S. energy industry is credited with adding large amounts of new supply to global markets to the point where the concept of $100 oil is a “long time” away, Wirth said. The boom in U.S. shale production also makes it unlikely the world will ever run out of energy needs, especially oil.
Of coarse U.S. shale companies need to remain focused on their capital and cost discipline and remain focused on thriving through a cycle of lower oil prices.
‘History Of Our Industry’
One of the more dominant trends playing out at the World Economic Forum is companies announcing a shift towards sustainability and clean energy. Wirth said he shares many of these principles and said the “history of our industry” validates his beliefs.
For example, the oil executive said he spoke with Microsoft CEO Satya Nadella before the tech giant announced its ambitious green objectives. At the end of the day, Microsoft is looking to become a more efficient company by integrating renewable energy into its business.
“That’s all good … there is nothing wrong with what they are doing,” Wirth said.
Wirth said Microsoft’s goals are no different from those in the oil and energy industry. The energy sector has “always been in transition” since day one with a focus on moving towards a more reliable, affordable, and cleaner state, the CEO said. Moving forward this is a commitment that “will never end” despite what anyone says or thinks about the oil industry.