According to the CEO of Chevron, economies “are going to have to gradual” as the closing of Strait of Hormuz causes disruptions to oil supplies

Due to the closure of the Strait of Hormuz in the wake of the Iran-Iran battle, according to Chevron CEO Mike Wirth on Monday, shortages will start appearing in the oil supply chain around the world.

In a discussion about the world economy’s growth at the Milken Institute’s Global Conference, Wirth claimed that as demand adjusts and oil supplies become sluggish, economies in Asia will be the ones to shrink.

According to Wirth, “physical shortages will start to appear,” adding that tankers operating in so-called” dark fleets” are being absorbed along with regional strategic reserves.

He claimed that “demand must change to meet offer.” “Economies will have to slow down.”

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According to Wirth, Asian nations rely the most on the fuel that is produced and refined in the nations close to the Persian Gulf, and they are most likely to experience scarcity first, followed by Western nations.

He claimed that the United States would experience less of a negative impact on other countries because it is the net exporter of crude oil, but that there will also be results from source restraints.

The Port of Long Beach, which supplies Los Angeles and Southern California, is where Wirth pointed out that the next scheduled sale of oil from the Gulf was being offloaded.

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According to Wirth, the overall effect of the Strait of Hormuz closure is “potentially since significant as in the 1970s” in terms of the energy crises brought on by the Yom Kippur War and the Iranian Revolution, which caused Middle Eastern oil exports to be hampered.

In response to the Iran War, energy prices have increased, with Brent and West Texas Intermediate, two benchmarks for global crude oil, trading over$ 100 per barrel after rising above$ 100 per barrel as a result.

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Gas prices are now at more than$ 4.48 per gallon on average, up more than 41 % from the previous year’s$ 3.16 per gallon average, according to AAA data.

Since the start of the war, when it was less than$ 2.50 per gallon before the war started, jet fuel prices have also increased significantly.

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As Spirit Airlines ‘ bankruptcy exit strategy was slowed down by the dramatic increase in jet fuel prices caused by rising costs.

This report was written by Reuters.