Shrinking Buffers Put Oil and Raw Materials at Greater Risk

Chevron CEO Mike Wirth warned that strategic reserves and commercial inventories are largely depleted, putting oil and raw materials at greater risk as disruptions from the Middle East conflict continue.

“Those have largely now played out, and we don’t have nearly the buffers in the system that we did when [the Middle East conflict] began,” Wirth said.

With buffers largely depleted, Wirth said it is becoming harder to see prices easing quickly. “I think the risks remain to the upside over the next few months,” he said.

Shell Chief Economist Adam Ritchie similarly warned that the longer the disruption persists, the greater the risk that markets will be exposed to future supply shocks.

Reopening energy chokepoints disrupted by the conflict would not necessarily bring an immediate recovery, Ritchie added, as bottlenecks across shipping, production and supply chains could delay a return to normal conditions ​well into 2027, assuming ​no further damage ⁠to energy infrastructure.

“Thereafter, we’ll need to see significant restocking, and that’ll be expected to draw on supply well into ​next year, potentially beyond,” Ritchie said.

The warnings come amid a broader escalation in threats to Saudi energy infrastructure and Red Sea shipping. Saudi Arabia shut its East-West oil pipeline Friday after multiple drone attacks damaged the system, taking a major Saudi crude export route carrying 4% of global oil supply offline. The Associated Press quoted regional officials who estimated the pipeline would be offline for three to five weeks for repairs while other oil industry analysts estimated six weeks.

The pipeline attacks follow a sharp decline in Saudi oil production and exports, with August production falling to a 2026 low of 6.2 million barrels per day and crude exports dropping to their lowest level since at least 2013, according to OPEC and Kpler data reported by the Financial Times.

The Houthis have also gained control of Yemen’s entire Red Sea coast, seizing Perim Island at the Bab el-Mandeb chokepoint and the Greater and Lesser Hanish islands in the southern Red Sea.

Meanwhile, the International Energy Agency (IEA) sharply lowered its global oil supply and demand forecasts in its September 2026 Oil Market Report as attacks in both the Gulf and Bab el-Mandeb chokepoint continue hampering the normalization of oil flows.

World oil supply is now projected to fall by 5.7 million barrels per day in 2026, roughly 6%, compared with the IEA’s previous estimate of 4%. Although high fuel prices are weighing on demand, supply is contracting faster, putting continued pressure on inventories. Global observed oil inventories fell by 95 million barrels in August alone, or 3.1 million barrels per day, bringing cumulative draws since the start of the war to 507 million barrels, according to the IEA.

“Inventories have so far played a crucial role in balancing the market,” the IEA said. “With buffers shrinking and the global refining system stretched to the limit, the need for progress in resolving the conflict in the Middle East – and the Russia-Ukraine war, which is now in its fifth year – is greater than ever to avoid further market tightening and demand destruction.”