Yemisi Izuora
Oil major, Chevron has expressed concern about consequences of supply hike frequency by the Organization of Petroleum Exporting Countries (OPEC).
Increased oil supply from OPEC and its allies will continue to put pressure on crude prices next year, while liquefied natural gas prices will likely fall later in the decade, according to Chevron Corp. Chief Executive Officer Mike Wirth.
“Oil prices in 2026 are likely to feel more pressure than LNG prices,” Wirth said in an interview with Bloomberg TV. “There’s a lot of oil supply that’s coming back from the OPEC+ countries that have been holding supply back.”
Back in August, Chevron correctly called the drop in oil prices in the second half of this year, and today unveiled a five-year plan to focus on profitability over production growth through 2030.
The plan proposes to grow free cash flow at a 14 per cent compound annual rate through the period with crude at $70 a barrel.
“We’ve built a portfolio that will withstand the cycles of this business,” Wirth said.
Chevron expects strong, “linear” demand increases for liquefied natural gas globally, but sees lower prices at the end of the 2020s due to a surge in supply, particularly from the Gulf Coast and the Middle East.
“There’s a period of time when it would appear we’re going to see more supply coming into the market than demand will be able to absorb,” Wirth said. “That probably results in lower spot prices.”