More oil clearly has begun moving through the Strait of Hormuz of late amid the ongoing Iran war—although the exact volumes are hard to parse—but Wright’s estimates surprised energy market analysts to the upside. He credited U.S. military intervention. More vessels are also taking the calculated risk by turning off their transponders and going dark. Both Wright and Wirth were speaking June 12 at a Bloomberg energy event in Houston.

With nearly 20% of the world’s global oil flows initially disrupted by the war, Saudi Arabia and the United Arab Emirates are diverting more volumes via pipelines. Wright said that left about a 14-million-barrel-per-day gap in typical flows of crude oil and some petroleum products.

“Flows today are approaching half of the gap, and they’re rising,” Wright said. “Ultimately, we will restore the flows with or without [Iran].”

He said the 7 million barrels per day is a “rough estimate,” adding, “and it’s rising.”

But the Chevron CEO contended that those numbers don’t quite match what the Big Oil giant is observing.

“Our view would be it’s probably not quite that much,” Wirth said, speaking shortly after Wright. “There are ships that have been transiting out—typically with their transponders off, typically at night, and with some support from the U.S. military.

“That has helped ease the fundamentals of the physical [oil] markets,” Wirth said. “The market has been pretty remarkable in terms of how it’s adjusted—on the supply and demand sides—to buy time and address the risks that exist.”

The U.S. wants oil flowing from the Gulf while maintaining a blockade on Iranian oil until a peace deal is finalized, Secretary Wright said. “Zero” Iranian barrels are exiting, he said.

“The military protection is there. It’s actually going remarkably well,” Wright noted.

Dwindling oil reserves

The global benchmark for oil futures peaked at $138 per barrel in early April just before the first ceasefire was announced—well more than double $61 at the beginning of the year—but it has since come back down to about $87 per barrel as of June 12—the lowest since early March—with hopes of a permanent peace deal on the horizon.

Oil prices have remained lower than feared—although still high—because of rising U.S. crude exports from the U.S. Strategic Petroleum Reserve (SPR), much smaller Chinese imports, and conservation efforts in other countries. More volumes sneaking out of the Middle East via pipeline and the Gulf also are contributing.

“This crisis shows us that the industry finds a way,” said oil forecaster Dan Pickering, founder of the Pickering Energy Partners consulting and research firm. “But if the strait does not open, even if 7 million barrels a day get out, that means [another] 7 million barrels a day aren’t.”

Larger price spikes are delayed, Pickering said, but they’ll still happen by the end of the summer or so if oil flows don’t return to normal, because emergency stockpiles are rapidly depleting.

Depending on emergency reserves means the nation’s SPR is shrinking to its lowest volumes since 1983 this week.

The administration has drained 66 million barrels—as of June 5—and counting from the SPR since the war in Iran began, according to the U.S. Department of Energy. Trump has authorized the overall release of 172 million barrels over several months. The companies buying the barrels are pledging to replenish them.

The SPR hit a three-year low of 349.2 million barrels on June 5, and it’s being drained by close to 9 million barrels every week. The Biden-era low was 346.7 million barrels in July 2023 after the Russian invasion of Ukraine, steadily growing from there until the Iran war.

Going any lower puts the SPR at levels not seen since August 1983.

“You cannot do this forever. The longer it lasts, the less insurance you have,” Pickering said, likening oil inventories to home insurance. “Insurance is always too expensive until your house burns down.”

Wright pledged June 12 that the U.S. will not ban U.S. oil exports and may extend the Trump administration’s Jones Act waiver beyond mid-August.

The 106-year-old Jones Act, which requires cargo ships moving between U.S. ports to be U.S.-built, -flagged, and -manned, reduces the number of vessels available to move crude oil and refined products between domestic ports.

The waiver allows more ships, for instance, to move fuel from the U.S. Gulf Coast through the Panama Canal and up to California to help alleviate shortfalls on the West Coast, especially since a couple of California refineries were shuttered in recent months.