Chevron sees oil prices under upward pressure through July

Chevron Corp. warned that crude prices face sustained upward pressure through June and July, a forecast that runs counter to the market's recent repricing after the U.S.-Iran ceasefire sent oil below $90 a barrel for the first time in weeks.

Chevron Corp. said crude prices face sustained upward pressure through June and July, a forecast that diverges from the market's recent repricing after the U.S.-Iran ceasefire sent oil below $90 a barrel for the first time since mid-April.

"Supply constraints from the Strait of Hormuz disruption and strong seasonal demand will keep the market tight through mid-summer," Chevron said in its public outlook published Thursday, without naming a specific executive as the source of the forecast.

The warning comes as Brent crude fell 4.6% to $92.25 a barrel and West Texas Intermediate dropped 5.5% to $88.68 on Wednesday, their lowest levels since April, after the U.S.-Iran ceasefire held and prospects grew for reopening the Strait of Hormuz to oil tankers. The S&P 500, Dow Jones Industrial Average and Nasdaq composite all set record highs the same day, with fuel-heavy stocks such as Norwegian Cruise Line Holdings and United Airlines surging on expectations that lower energy costs would ease pressure on their bottom lines.

Chevron's outlook suggests the recent price decline may be short-lived. The Strait of Hormuz, through which about 20% of the world's oil passes, has been effectively closed during the Iran conflict, pushing energy prices higher and pulling investor money away from traditional safe havens like gold. Even with a ceasefire in place, Chevron expects the supply chain to take weeks to normalize, keeping upward pressure on prices through the peak summer driving season.

Why Chevron's forecast matters for the broader market

The divergence between Chevron's view and the market's immediate reaction highlights the uncertainty surrounding the Iran situation. Greek refiner Motor Oil reported first-quarter profit nearly quadrupled to €332.7 million from €85 million a year earlier, with revenue jumping about 25% to €3.36 billion, as it benefited from stronger refining margins and export activity — a sign that energy companies have been capturing the upside from elevated prices.

For investors, the stakes are significant. If Chevron is correct and oil prices remain elevated through July, energy sector stocks and oil-related exchange-traded funds could see renewed support, while transport and aviation stocks that rallied on the ceasefire news may face headwinds. Higher oil prices would also complicate the Federal Reserve's inflation outlook — April CPI came in hot, and some traders are now betting on a rate hike before year-end, according to market pricing.

The last time the Strait of Hormuz faced a sustained disruption was during the Iran-Iraq war in the 1980s, when oil prices remained elevated for months after the initial conflict de-escalated. If history is any guide, the supply chain normalization process could take longer than markets currently expect.

This article is for informational purposes only and does not constitute investment advice.