Chevron CEO, Goldman Sachs warn physical oil shortages could slow global economies

Physical shortages of oil could soon emerge worldwide as global stocks approach their lowest level in eight years.

The warning from Goldman Sachs came as the CEO of Chevron said the supply impact from the continued closure of the Strait of Hormuz would lead to economies slowing to adapt.

Economic growth stalled

Mike Wirth, Chevron Chairman and CEO, said global supply shortages would begin appearing, with the 20% of world's crude supply usually passing through the Gulf waterway still effectively blocked due to the US/Israel conflict with Iran.

“We will start to see physical shortages,” he told a conference in California on Monday. “Demand needs to move to meet supply … economies are going to have to slow.”

Goldman Sachs has also warned that the speed ‌of depletion was becoming a concern four weeks after a ceasefire was declared. On Monday, that peace came under threat when Iran hit ships in the Strait and oil facilities in Fujairah, UAE, as the US attempted to free up shipping.

Stark numbers

The International Energy Agency (IEA) said global oil supply plummeted by 10.1 mbpd to 97 mbpd in March, while global observed oil inventories fell by 85 mb, with stocks outside the Middle East Gulf drawn down by a significant 205 mb as flows through Hormuz were choked off.

Goldman Sachs estimated total global oil stocks could fall ‌to 98 days of global demand by the end of May. However, the bank added that while those stocks were “unlikely to hit minimum operational levels this summer, the speed of depletion and supply losses in some regions and products is concerning”.

Contrary to the global trend, S&P Global said China added 40 mb of crude to its storage in March.

Contracting economies

Countries in Asia could be the first to experience economic shrinkage. The continent is most heavily dependent on Gulf oil production and refining, Wirth explained, with Europe likely to be affected next as demand adjusts to reduced supply.

He described the overall effect of the Hormuz closure as “potentially as big as in the 1970s” when major supply disruptions shook economies worldwide, leading to fuel rationing and long queues at the pumps. A surge in jet fuel prices amid tighter supplies put US budget carrier Spirit Airlines out of business last weekend.

Stock under pressure

IEA member countries are required to hold emergency oil stocks equivalent to at least 90 days of their net oil imports, a rule designed to ensure a coordinated response in times of crisis. As of 25 March, members held more than 1.2 billion barrels of public reserves, alongside roughly 600 million barrels held by industry under government obligation, according to Statista.

Net oil exporters, the US, Canada, Norway, and Mexico, are not bound by this requirement. However, the US maintains the world’s largest emergency stockpile through its Strategic Petroleum Reserve, which currently holds about 415 mb (as of 27 February).

The IEA said Japan has the most strategic oil stock among net importers, at 208 days, while Australia has the least, at 49 days (as of December 2025).

Wirth said the US would be less impacted by shortages than many territories, but would eventually feel the effects.

The US Energy Information Administration (EIA) Short-Term Energy Outlook in March confirmed that. It revealed a list of estimated strategic crude oil inventories in selected countries (as of December 2025), topped by China at 1,397 mb, followed by the US at 413 mb, and Japan (263). OECD Europe held 179 mb, followed by Saudi Arabia (82), with the UAE (34) and India (21) showing the least. Iran held 71 mb.

Demand fall

The IEA said it expected oil demand to contract this year in April’s Oil Market Report.

A forecast of a 1.5 mb/d decline in 2Q26 would be the sharpest since COVID-19. Cuts in oil use were already emerging in the Middle East and Asia Pacific, mainly for naphtha, LPG and jet fuel.

Oil prices posted their largest-ever monthly gain in March in the wake of the “most severe oil supply shock in history”.

The IEA added: “Demand destruction will spread as scarcity and higher prices persist.”