The CEO of oil giant Chevron on Tuesday warned the ongoing tensions in the Red Sea pose “very real” risks to oil flows and prices as Yemen’s Houthi rebels increase attacks against Israel and commercial shipping in the region.
Asked by CNBC about what the Houthi attacks could be for the global oil supply, Chevron CEO Michael Wirth said, “Well, we watch it very closely. I mean, the safety of our people is the most important thing that we work on every single day. We have ships that go through the Arabian Gulf and the Red Sea regularly.”
“We coordinate every vessel movement with U.S. and other military authorities that are in the region, but it’s a very serious situation. It seems to be getting worse,” he continued.
CNBC’s “Squawk Box” anchor Rebecca Quick pointed out U.S. crude oil was trading below $73 a barrel as of Tuesday morning and asked Wirth if he was surprised to see this.
“It does [surprise me] because the risks are very real,” Wirth said. “And so much of the world’s oil flows through that region that were it to be cut off, you could see, I think, things change very rapidly.”
The Houthis, an Iran-backed rebel group, have waged a series of attacks on commercial and merchant vessels in the Red Sea, a major trade route for oil companies. The rebel group claims the attacks are part of a maritime campaign to protest Israel’s bombardment of Gaza in its war with Hamas, though attacks have been launched against multiple vessels with no ties to the Jewish State.
The uptick in attacks in the region prompted the U.S. to launch counterstrikes on military targets in Yemen and the Biden administration is now weighing reimposing a terrorist designation for the Houthis. President Biden removed the foreign terrorist organization (FTO) label on the Houthis in February 2021 in the wake of concerns the label would prevent aid organizations and businesses from providing humanitarian assistance.
“Nothing to update yet on the FTO designation,” White House National Security Council spokesperson John Kirby told reporters Tuesday. “We’re still in the process of reviewing it.”
The attacks have forced several oil companies, including BP, A.P. Moller-Maersk, MSC, Hapag-Llyod and CMA CGM, to reroute their movement in recent weeks, risking shipping delays and increased oil prices.
British oil major Shell suspended all shipments through the Red Sea on Tuesday, people familiar with the matter told The Wall Street Journal (WSJ).
Wirth said Chevron has been “able to maintain” movements throughout the region while noting it is an “evolving situation”
“We really have to watch very carefully,” he said.
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