“I do think a coordinated response by multiple countries could help in the near-term,” Wirth said in response to a question from CNN during a briefing with reporters. “Certainly, we’ve seen markets on edge with concern about supply and supply reliability.”
Brent oil prices closed above $100 a barrel on Monday for the first time since 2014. US crude and Brent jumped another 5% on Tuesday even as the International Energy Agency meets to discuss a response to the Russia-Ukraine crisis.
President Joe Biden indicated last week the United States stands ready to release more oil from the Strategic Petroleum Reserve, the nation’s stockpile of oil that was tapped in November in response to high prices.
“The Strategic Petroleum Reserve was intended to be used in times of actual supply disruptions or high risk of supply disruption,” Wirth said. “Unlike some other times when we’ve seen it used perhaps more because of anxiety about prices but no real supply concern, in this instance use of the reserve would be consistent with what it was established for.”
However, the Chevron (CVX) CEO urged the federal government to take broader steps to encourage the long-term development of oil and natural gas.
The invasion of Ukraine has driven concerns about a supply disruption from Russia, the world’s No. 2 oil producer. Wirth expressed confidence that won’t happen.
“I’ve seen nothing to indicate that either Russia’s intentions or the intentions of governments involved in sanctions would be to restrict oil supply,” Wirth said. “In fact, quite the opposite. It would appear to me that people have been very careful to signal their intention is to try to maintain energy supply to 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 West Kazakhstan and Russian oil producers. The Russian government and Chevron own stakes in the venture, according to its website.
“We’ve had no indications from any government that operations of the Caspian Pipeline Consortium are likely to be interrupted,” Wirth said, adding that this is an important source of supply, carrying more than 1 million barrels per day out of landlocked Kazakhstan.
High oil prices have lifted prices at the 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 expensive that it erodes demand from consumers and slows the broader economy.
“We have a strong economic recovery underway globally. To this point, economies have been able to accommodate high energy prices and still deliver growth,” Wirth said. “I think there probably is a limit to that.”