Energy industry experts and analysts are issuing warnings about the likelihood of a significant increase in oil and gas prices due to depleting reserves and the ongoing closure of the Strait of Hormuz.
The current price for Brent crude futures stands at $98.20 US per barrel as of midday Wednesday. However, industry specialists predict a potential surge to $150 US or higher in the near future. This spike is attributed to diminishing prospects for a U.S.-Iran agreement to reopen the Strait and the steady demand in certain markets as reserves dwindle rapidly.
During a conference in New York last week, ExxonMobil’s Senior Vice President Neil Chapman highlighted the approaching unprecedented inventory levels. He emphasized the possibility of prices skyrocketing once inventory levels hit critically low points, indicating a potential rise to $150 US to $160 US within a short timeframe.
Chevron CEO Mike Wirth, in an interview with Bloomberg Talks last week, also expressed apprehension regarding reserve levels. He noted a gradual drawdown of inventories globally, mentioning the likelihood of inventories reaching a critical stage soon.
In response to the Middle East conflict, 32 International Energy Agency members agreed in March to release 400 million barrels of oil from emergency reserves. According to the latest report from the Department of Energy, the U.S. Strategic Petroleum Reserve currently holds 357.1 million barrels of oil as of May 29, representing a significant decrease since the war in February 2026.
Despite the ongoing tensions in the region and the closure of the Strait of Hormuz, efforts to negotiate a reopening have faced challenges. The conflict initiated by the U.S. and Israel has continued with recent missile strikes by Iran on U.S. military bases in the Gulf region, leading to a surge in oil prices.
Experts in the energy sector, including Al Salazar from Enverus and Heather Exner-Pirot from the Macdonald-Laurier Institute, emphasize the potential for oil prices to remain elevated through 2027. The uncertainty surrounding the reopening of the Strait and the geopolitical dynamics contribute to the market’s volatility.
Demand for fuel in Canada remains resilient despite supply constraints and price hikes, with consumers showing continued interest in gasoline and jet fuel. As the summer season approaches, further increases in gas prices are anticipated, potentially exceeding $2 per liter in Canada if oil prices reach $120 to $140 per barrel.
The closure of the Strait of Hormuz has impacted global oil shipments, prompting some countries in Asia to implement measures like shortened work weeks or remote work arrangements. While higher oil prices may offer some economic benefits to Canada, concerns over inflation and the potential need for interest rate hikes persist.
Overall, the market faces uncertainty as stakeholders navigate the complex geopolitical landscape and strive to address the challenges posed by the ongoing conflict and its implications on global energy markets.