Shell CEO says oil prices will top $70 as demand outpaces supply

Shell Chief Executive Wael Sawan said oil and gas prices will continue rising over the next five to 10 years as global demand growth strains an industry that has already found most of the world's easy-to-extract reserves.

"Prices are going to move up. That's the story of five to ten years ahead," Sawan said Wednesday at the WSJ Leadership Institute CEO Summit in an interview with the Journal's Gordon Fairclough.

Sawan said a price of around $60 to $70 a barrel would keep the market stable, but the long-term trajectory points higher. Brent crude traded at $89.25 a barrel Wednesday, up 1.2 percent, after the Iran conflict disrupted flows through the Strait of Hormuz, a chokepoint that handles about a fifth of global oil consumption. Saudi Arabia has diverted more than 70 percent of its normal daily crude exports to the Red Sea port of Yanbu to bypass the strait, according to Reuters.

The supply disruption has already boosted Shell's earnings, with the London-listed group booking nearly $2 billion in adjusted earnings from its oil-trading division in the first quarter. But Sawan's longer-term warning suggests the current crisis may be a preview of a structural shift, as depletion of existing fields and underinvestment in new capacity collide with rising consumption from developing economies.

Growing demand and rising prices could lead producers to pursue hydrocarbon resources that are currently uneconomic to explore, Sawan said. "All the easy oil and gas has been found," he said.

The U.S. Energy Information Administration has warned that oil inventories are headed toward multi-decade lows, adding to the supply-side pressure. The inventory drawdown compounds the effect of the Strait of Hormuz closure, which has removed roughly 17 million barrels a day of crude from normal transit routes since late February.

Global currents will increasingly drive the cost of resources as countries focus on their own energy security, Sawan said. "For now, we have the ability to match the world's demand," he said. "But that will get more challenged."

The Houthi threat adds another layer of risk. Yemen's Iran-aligned group said Monday it would ban ships linked to Israel from the Red Sea, raising the prospect of disruption to Saudi crude exports flowing through Yanbu. When the Houthis attacked Red Sea shipping during the Gaza war in 2023 and 2024, major container lines diverted around Africa, adding thousands of miles to voyages. Any sustained disruption to the Yanbu route would remove a critical safety valve that has helped keep global oil prices from rising even further.

The last time oil markets faced a comparable supply shock was during the 2019 attacks on Saudi Aramco's Abqaiq and Khurais facilities, which temporarily knocked out 5.7 million barrels a day of production. Prices spiked 15 percent in a single session before Saudi Arabia restored output within weeks. This time, the disruption has persisted for months with no clear resolution, and the EIA's inventory warning suggests the buffer to absorb further shocks is thinner than it has been in decades.

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