Shell CEO Warns Oil Prices Could Rise Over Next Decade

Shell CEO Wael Sawan warned Wednesday that oil prices could continue to rise over the next five to ten years, even after the current Middle East conflict ends. Speaking at The Wall Street Journal's Leadership Institute CEO Summit, Sawan said demand remains firm while the easiest oil and gas resources have already been tapped, pointing to a structural shift in supply dynamics. This view aligns with the reality that global spare capacity, largely held by OPEC+ core members like Saudi Arabia and the UAE, has dwindled to around 4-5 million barrels per day, down from over 10 million bpd a decade ago. Meanwhile, the Brent-WTI spread has widened to over $5 per barrel, reflecting tighter Atlantic Basin supply relative to US production, which has been constrained by Permian Basin maturity and limited new drilling.

For energy traders, Sawan's comments reinforce the view that the oil market is entering a period of sustained upward pressure. The CEO noted that prices in the $60 to $70 per barrel range would keep the market stable, but he expects prices to move higher over the long term. This outlook comes as crude oil already rose 1.7% on Wednesday, with front-month Nymex crude settling at $89.76 per barrel, driven by heightened tensions around Iran. The crack spread—the difference between crude oil and refined product prices—has widened to over $30 per barrel for gasoline, indicating strong refining margins that support crude demand. Additionally, US Strategic Petroleum Reserve (SPR) levels remain near 40-year lows at around 370 million barrels, limiting the government's ability to intervene in supply shocks. Traders can check NowPrice's fuel page for real-time pricing on crude benchmarks and refined products.

Looking ahead, the market will focus on upcoming OPEC+ meetings and any shifts in Iranian supply. The combination of dwindling spare capacity, steady demand growth, and geopolitical risk suggests that volatility may remain elevated. Saudi-Russia coordination remains intact, with both nations signaling a preference for high prices to fund their budgets, while China's marginal demand—as the world's largest crude importer—shows signs of slowing due to economic headwinds, but still grows at around 1-2% annually. The futures curve has shifted from contango to backwardation, reflecting immediate tightness. Traders should monitor inventory data and demand signals from China for further direction.