Shaikh Nawaf Al Sabah, Vice Chairman and CEO of Kuwait Petroleum Corporation, speaks at the CERAWeek Oil Summit in Houston, Texas on March 19, 2024.
Mark Felix | AFP | Getty Images
HOUSTON — The CEO of Kuwait Petroleum Corporation told CNBC that the Red Sea crisis could cause the world's tanker fleet to run out if disruption continues for another six months.
Houthi militants have been attacking commercial ships in the Red Sea in support of Palestinians since November, as Israel wages a war in Gaza. The attack has forced many container shipping and tanker companies to divert traffic around the Cape of Good Hope in southern Africa, increasing time and costs.
„One of our concerns is that if this situation continues for another six months, we will probably not be able to continue to operate our tanker fleet,“ President Sheikh Nawaf Al Sabah said at a press conference. ” he said. Interview at S&P Global Energy Conference „CERAWeek“.
Al-Sabah said KPC diverted a significant amount of production around the Cape during the crisis, but did not provide specific numbers. He said the company continues to operate ships through the Red Sea and makes daily decisions about which routes ships should take.
„We maintain a strategic tanker fleet for this reason,“ Al-Sabah said. “We are satisfied that we can supply our customers with the quantities they need on time and without any problems, but I don't know how many other producers have that kind of strategic vision.”
Al-Sabah does not believe tensions in the Middle East could lead to conflict and disrupt oil supplies in the wider region. Although the Persian Gulf has faced numerous wars, the only time Kuwait was unable to transport goods was during the 1990 invasion of the country by Iraqi dictator Saddam Hussein, he said.
The CEO said, „I don't see any concerns about supply.'' “I am confident that the industry and the system are well-equipped to deal with any potential supply crisis that may arise.”
chevron But CEO Michael Worth said the security situation in the Middle East was „unstable“ and „could change rapidly“. Wirth told CNBC that Chevron „is not moving ships into the Red Sea.“
„The ongoing conflict between Israel and Gaza continues, there is no resolution in sight, and risks to the region remain high,“ Wirth told CNBC's Brian Sullivan on CERAWeek.
Chinese demand, US production
Crude oil futures prices have risen this year, but have struggled to break out amid uncertainty over the health of China's economy and the strength of U.S. crude oil production. Concerns about slowing demand in China weighed on prices after U.S. production hit a record high of 13.3 million barrels per day last year.
Al-Sabah said he was not worried about oil demand in the world's second-largest economy.
“I frequently visit our partners in China, and their feedback has always been that they would be happy to receive additional supplies,” Al-Sabah said. „Demand in China is steadily increasing and is strong.“
conocophilips CEO Ryan Lance said: Remarks at CERAWeek Growth in U.S. crude oil production this year is expected to slow to between 300,000 and 400,000 barrels per day, up from 1 million barrels per day last year. Total U.S. production will eventually top 14 million barrels a day at some point this decade, and then plateau, Lance said.
After oil prices fell last year, OPEC and its allies agreed to cut production by 2.2 million barrels a day to support the market. These cuts will continue until at least the second quarter of this year.
Al-Sabah said he did not think U.S. production would be a challenge to KPC's market share because OPEC would keep the barrels off the market. KPC plans to increase production capacity from the current 3 million barrels per day to 4 million barrels per day by 2035.
„Looking at the second half (of this year), I think there are more opportunities for upside than downside in terms of demand,“ Al-Sabah said. “We will continue to supply the market in order to maintain balance and stability.”