Iran Deal Coming Soon — Because Exxon Is Running Out of Oil

Support CleanTechnica’s work through a Substack subscription or on Stripe.

I was going to write this story last night. I put the title in there, but it was very late and there was a high chance I’d fall asleep in the middle of writing it, so I pushed it off. The top story on Google News today is US Vice President JD Vance saying the US and Iran are very close to a nuclear deal, which would end the war between the two countries. Whether this is true or just another attempt at spinning the story and trying to manifest a positive outcome by claiming one is coming, I don’t know, but I do assume it is driven in strong part by what I put in the title.

Exxon Mobil Senior Vice President Neil Chapman has warned that oil inventories are draining fast and could reach “really, really low levels” in the coming few weeks if the situation in the Middle East isn’t resolved. Naturally, if oil inventories go down to “really, really low levels,” prices will spike. We think we’ve seen a significant rise in the price of gasoline since the US first bombed Iran earlier this year, and we have, but that would all be the appetizer to the much bigger main meal if things don’t change soon.

“We’re approaching unheard of inventory levels,” Chapman said at a conference in New York. “I mean really, really low levels,” Chapman warned. “You can debate whether that’s going to hit, those really low levels, in two weeks or three weeks. Once you get to that point, then you’ll see price shoot up.” In other words, we don’t know what’s actually going to happen, but if oil inventories keep going as they have, we are in for a real shock before the end of June.

“When the price gets to a certain level, demand destruction brings it back into balance,” he added. So … people will just stop driving?

Gas prices are high, but inventories have still largely kept consumers shielded from what’s going on. The International Energy Agency notes that more than a billion barrels of oil have been kept from market from the Straight of Hormuz closure. The agency says this is the largest oil supply disruption in history. Again, though, we are largely being shielded from what it means because of oil inventories — but those are draining fast.

It reminds me of what happens going into all types of large societal crises — people don’t feel the crisis building and therefore just assume everything is fine until a real breaking point is hit that leads to a dramatic event that ca’t be ignored.

The warning from Chapman and Exxon is clear: this can’t go on much longer. There’s only so much oil in storage. So, yes, it is not surprising that JD Vance is saying the US is on the verge of a deal with Iran. It has to be, even if that means making one of the most horrible deals possible. Even if that means a deal worse than we’ve ever had with Iran, the US needs to sprint forward and make it happen. Of course, Iran knows the urgency of the situation, so it will keep that as significant leverage in any deal. The country does not need to rush through a deal before the end of June, so it clearly has the much stronger hand now. We’ll have to wait to see what that means, but most Americans won’t care as long as they don’t have to deal with spiking gas prices in a few weeks.

Of course, if a deal is not made for some reason, and oil inventories do run dry, expect a huge surge in electric vehicle interest.