Oil Executives Warn White House of Imminent Fuel Price Spike as Hormuz Inventories Near Depletion

Four oil industry executives privately warned senior White House officials and Cabinet secretaries in recent weeks that global petroleum inventories have fallen to critically low levels and that a significant fuel price spike is likely within the coming weeks, according to POLITICO [POLITICO]. Industry executives flagged the issue to senior White House officials and Cabinet members as part of the Trump administration's ongoing dialogue with the U.S. energy industry. One executive, granted anonymity to discuss private conversations with the administration, stated the situation has reached "dangerously low levels already." A second executive described the depletion in blunter terms, warning that the market is "hitting tank bottom" [POLITICO]. A White House official denied that any senior members of staff were warned privately by the industry about inventories, stating that "Politico's anonymous sources are wrong." An Energy Department official similarly disputed the account [POLITICO].

Iran has effectively closed the Strait of Hormuz since the United States and Israel launched military strikes approximately three months ago, producing what analysts describe as the largest disruption in crude oil flows ever recorded. The strait carries around a quarter of global seaborne oil trade, as well as significant volumes of liquefied natural gas and fertilizers. Unleaded gasoline prices have risen more than $1.20 per gallon since the war began, reaching a national average of $4.12 in mid-April; the average stood at $4.26 per gallon as of Wednesday, according to AAA, $1.28 higher than before the conflict started. Oil prices surged sharply after the outbreak of conflict and the near-total disruption of shipping through the strait, with Brent crude recording its highest monthly rise ever by end of March. The U.S. Strategic Petroleum Reserve stood at 357.1 million barrels as of May 29, according to the Department of Energy, more than 50 million barrels below its pre-war level and approaching its lowest point since December 2023.

ExxonMobil Senior Vice President Neil Chapman delivered one of the most direct public assessments at the Bernstein Strategic Decisions Conference in New York on May 28, noting that commercial inventories of crude oil, gasoline, diesel, and jet fuel have been steadily drained, with governments releasing strategic reserves to cushion the blow. Chapman warned that inventory levels are "approaching unheard-of" territory, and that "once you get to that point, then you'll see the price shoot up," projecting dated Brent crude could reach $150 to $160 per barrel. Chevron CEO Mike Wirth separately expressed concern about reserve levels in an interview with Bloomberg. Wirth has stated that futures markets have not fully priced in the physical consequences of the strait's closure, and has projected direct upward pressure on physical prices to intensify in June and July. The private warnings echo what these executives have said publicly. ExxonMobil CEO Darren Woods reinforced the assessment in the company's first-quarter 2026 earnings call, noting that the market has not yet seen the full impact of the supply shock and that prices will rise meaningfully, with a one- to two-month lag, even if the strait reopens before normal flows resume.

The Trump administration has pointed to record-high U.S. oil production, along with new supplies from Venezuela and a Jones Act waiver allowing foreign-flagged ships to deliver between U.S. ports, as factors protecting American consumers from spiking prices. The administration has promised that reopening the strait would bring costs back to pre-February levels, with White House spokesperson Taylor Rogers stating that "President Trump and his energy team anticipated short-term market disruptions, communicated them openly to the American people, and implemented an aggressive plan to mitigate any impacts." The Jones Act, codified at 46 U.S.C. § 55102, generally restricts domestic waterborne cargo transport to U.S.-flagged vessels; waivers require a determination by the Secretary of Homeland Security that such relief is in the interest of national defense.

The dispute between industry and the White House tracks a volatile diplomatic backdrop. In recent days, the two sides have discussed a memorandum of understanding to extend the ceasefire by 60 days, reopen shipping traffic in the strait, end the U.S. blockade of Iranian ports, and launch negotiations on nuclear issues, with Trump's personal edits to the draft touching on the Strait of Hormuz provisions and the disposition of highly enriched uranium. Mediators led by Pakistan are handling the back-and-forth between Washington and Tehran. As recently as last Friday, Trump ended a meeting in the White House Situation Room without announcing a final decision on whether to approve a deal to pause the war, according to an administration official. Iran disputes Trump's characterization of any agreement and says the waterway will remain under its control, according to state media. Iran's state news outlet Fars stated that Trump's announcement of the strait's reopening as part of a "largely negotiated" deal was "incomplete and inconsistent with reality" [POLITICO].Trump has separately posted on TruthSocial that the U.S. blockade "will remain in full force and effect until an agreement is reached, certified and signed."

The inventory warnings arrive at a legally and strategically significant moment. The U.S. naval blockade operates under presidential authority as Commander in Chief under Article II and is supported by authorities under the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-1708, through which the administration has also threatened secondary sanctions against financial institutions that facilitate Iranian oil sales. In April, the U.S. sent letters to financial institutions in several countries, including China, threatening secondary sanctions if they facilitate the sale of Iranian oil. The conflict has cost U.S. taxpayers an estimated $29 billion, according to Pentagon Chief Financial Officer Jules Hurst, who updated the figure during testimony before a House Appropriations subcommittee on May 12, up from a $25 billion projection he provided two weeks earlier. Analysts have said that even if a lasting deal to reopen the Strait of Hormuz emerges, it could take months for oil shipments to return to normal levels and for fuel prices to decline.