Oil prices are on track to hit $100 a barrel, but the economy can handle it, Chevron CEO says
AP Photo/Gene J. Puskar
- Oil prices are on the rise and are tracking towards $100 a barrel.
- Chevron CEO Mike Wirth said that ongoing supply constraints have contributed to the rise in prices, but the economy can handle it.
- "I think the underlying drivers of the economy in the US and frankly globally remain pretty healthy," Wirth said.
Oil prices are on track to soon cross the $100 per barrel level, but the economy should be able to handle the higher costs of the key energy commodity, Chevron CEO Mike Wirth told Bloomberg in an interview on Monday.
West Texas Intermediate crude oil has surged nearly 30% since July and hit a high of $91.36 on Monday, while Brent crude oil jumped to a ten-month high of $94.95. Prices for gas at the pump are also on the rise, with the average national gas price rising to $3.88 on Monday, according to data from AAA.
According to Wirth, the rise in oil prices is being driven by a combination of ongoing supply constraints as Saudi Arabia and Russia recently extended their production output, as well as a resilient economy driving demand for the commodity.
"We're certainly moving in that direction [towards $100 per barrel]. Supply is tightening, inventories are drawing. These things happen gradually. The trends would suggest we're certainly on our way [to $100 per barrel]," Wirth said.
But despite rising gas prices and the sizable negative impact it could have on consumer sentiment, Wirth believes the economy can handle higher gas prices just like it did for all of 2022.
"It will have some effect on the economy but we've had relatively higher oil prices here now for most of this year and certainly all of last year, and the recession that everyone's been talking about hasn't arrived. So I think the underlying drivers of the economy in the US and frankly globally remain pretty healthy, so I think it's a drag on the economy but one that thus far I think the economy has been able to tolerate," Wirth said.
With a market valuation of $320 billion, Chevron is America's second largest oil company after Exxon Mobil.