Chevron CEO Michael Wirth said Tuesday the ongoing attacks by Houthi rebels on shipping vessels in the Red Sea poses “very real” risks to oil flows and prices.
“It’s a very serious situation and seems to be getting worse,” Wirth told CNBC in an interview at the World Economic Forum in Davos, Switzerland.
He noted that Chevron, a giant in the industry, has ships that transport oil through the Arabian Gulf and the Red Sea regularly. The company has been following the Houthi attacks “very closely” to monitor the safety of Chevron’s employees, he said.
“We coordinate every vessel movement with U.S. and other military authorities that are in the region, but it’s a very serious situation. It seems to be getting worse,” Wirth added.
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Asked about U.S. oil prices, Wirth said he was surprised to see crude oil trading below $73 a barrel because the “risks are very real.”
“So much of the world’s oil flows through that region that were it to be cut off, I think you could see things change very rapidly,” he told CNBC.
Chevron competitor Shell has suspended all shipments through the Red Sea indefinitely amid the ongoing Houthi attacks from Yemen, the Wall Street Journal reported Tuesday. BP paused shipments through the Red Sea last week, and Qatar Energy followed suit this week with its shipments of liquefied-natural-gas-exports.
Speaking to Reuters at the World Economic Forum in Davos, Switzerland, an executive from the port and freight operator DP World predicted that the prices of consumer goods will be “significantly higher” as a result of the Houthi attacks, specifically impacting Europeans’ pocketbooks.
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Since November, Iranian-backed Houthi rebels in Yemen have launched dozens of missiles and drones at commercial vessels around the Red Sea. They are claiming to avenge the Israel counter-operation in Gaza against Hamas terrorists, though the Houthi attacks have grown increasingly indiscriminate and have even imperiled tankers and container ships moving sanctioned Russian oil.
Houthis targeted a tanker by Shell on its way to carry Indian jet fuel through the Red Sea last month.
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The Houthi attacks provoked a U.S. military response, with President Biden ordering airstrikes on military targets in Yemen. The Biden administration is currently considering whether to reverse a 2021 decision to remove the foreign terrorist organization (FTO) label imposed on the Houthis by the Trump administration.
“Nothing to update yet on the FTO designation,” White House National Security Council spokesman John Kirby told reporters on Tuesday. “We’re still in the process of reviewing it.”
Fox Business’ Danielle Wallace contributed to this report.