Energy CEOs Warn of Global Refined Product Shortage

Chief Executive Officers of Europe's largest energy companies report a fundamental divergence in the global oil market, characterized by a bearish outlook for crude oil and bullish prices for refined products. Speaking at the ONS conference in Stavanger, Norway, Patrick Pouyanne and Wael Sawan attributed the product squeeze to a triple threat of Ukrainian drone attacks on Russian refineries, shipping dangers in the Red Sea, and risks in the Persian Gulf.

Pouyanne estimated that Ukrainian attacks have reduced Russian fuel supplies by 3 million to 3.5 million barrels per day. He noted that while crude cargoes continue to transit the Strait of Hormuz, high shipping costs have halted the movement of refined products through the strait.

Sawan stated that Shell is attempting to maximize refined product output from its own assets to alleviate customer costs. He warned that the industry faces a difficult period ahead as companies work to mitigate the impact of these supply constraints on consumers.