Oil executives say fuel crisis has begun as Hormuz shutdown and Saudi pipeline outage tighten markets

The global oil market is feeling the impact of a near-total shutdown of the Strait of Hormuz and the loss of a major Saudi pipeline that was used to bypass the waterway, industry leaders said. Chevron chief executive Mike Wirth told the Wall Street Journal that the disruptions have exhausted the mechanisms that normally cushion price and supply risks, adding that "all these mechanisms helped to mitigate the price and supply risk. Those have largely now played out." The damaged pipeline, which moved about 2.5 million gallons of fuel per day, is expected to remain offline for weeks, according to the Associated Press. The combined effect has driven crude oil prices close to $101 a barrel and pushed diesel to a record $6.23 a gallon.

U.S. Interior Secretary Doug Burgum described the situation as a temporary disruption and urged Venezuelan and domestic refiners to increase output. President Donald Trump, who has not spoken with Wirth since early August, has publicly called for lower fuel prices while pledging additional economic pressure on Iran and rejecting the deployment of U.S. troops. Energy advisers warned that a prolonged conflict, constrained diesel supplies and China's decision to resume purchases rather than rely on reserves could keep consumer prices high. Trump’s comments suggesting the conflict could extend beyond the upcoming midterm elections were noted as an indication that the supply squeeze may persist.