Bloomberg Audio Studios, Podcasts, Radio News. Welcome to our continuing coverage from the Milk and Global Conference here in Beverly Hills, California.
I'm Romain Bostic and I'm Katie Greifeld.
We got a lot to talk about today, of course. This is a very sprawling conference here, more than three hundred sessions, and a big topic in a lot of those sessions, Katy Greidfeld, is energy.
It's hard to ignore, of course, and you can see the reaction in markets today. And this is a story that you know, we've been coming to grips with over the past two months, and it just continues.
And absolutely we came into today thinking that we were still in a ceasefire, thinking that we were making progress towards a reopening up the straight Oh horror, moose. But you've seen the headlines, You've heard them here on Bloomberg Television, and that conversation continues right now with the CEO of Chevron, Mike Worth. Mike, great to have you here on the free here. Of course, I have to start with the
news of the day here. Whatever ceasefire that we did have in the Middle East, at least for right now, seems to have broken down. A lot of questions right now out about just how prolonged disclosure of the straight or hormones will be and just how much it's going to affect the economy.
I think it's still difficult to say. Romaine, it sounded as if there were plans to try to establish a transit corridor. Now we've got these reports that there have been some kinetic activity in the region. I've been in touch with our people that manage our shipping assets in the region, and we remain concerned about the security of transit. So you know, it seems like we still have, you know, some issues to work through.
You are no stranger to Washington. You've had a seat at the President's table more or less multiple times here. What would your advice be to the administration to try to bring this to some sort of conclusion.
Well, my advice to the president really relates to energy markets, not to diplomacy and negotiations. And you know, I've advised people in the administration that this the buffers and system that help ensure supplies are available to markets are being drawn down, and what that does is it creates more upside price pressure, potentially more volatility and more risk, and so I can find my discussions really to the energy system, not to diplomacy or the military side of things.
Fair enough.
It is interesting though, you think about where the US sits in this. You look at net exports coming from the US. They've certainly increased. We saw that last week as well. But how long can that sort of continue and plug the gaps that we're starting to see in the global supply chain when it comes to energy markets.
Well, the US is the largest producer in the world, and we've been exporting products crude oil gas in growing quantities in recent years, and so it's a good thing for the world that the US is able to help meet the need. That said, twenty percent of the world's energy supply flows through the straight of hornm moves. That's oil and that's liquefied natural gas, it's refined products. Goes to Europe and Asia primarily, and both of those regions are seeing the impact of having that much cut off.
The US can't make up all of that supply. Inventories in the system are being drawn down and the supply situation is tightening, and that's a concern.
And you know, you think about the US and where we stand when it comes to production. That of course has insulated the US consumer to some degree from some of the higher prices that we're seeing in Asia, that we're seeing in Europe. And I just wonder, from where you're sitting, how long you think that will continue to be the case, or you know, is the US heading towards the situation where consumers are going to see the same sort of prices that we're starting to see in Asia.
I think the real thing is the US is not going to see supply outages. We're starting to see risks of supply outages in some of these economies. In Europe. You're seeing flights canceled and schedules re optimized because jet fuel is getting very, very tied in Europe. We've seen a number of economies in Asia that have instituted policies to reduce demand because they're concerned about n out of supply.
Countries like Australia that have shut down most of their refining capacity and are heavily dependent upon imports are taking measures to address that. So I think the US is going to see the price pressures. It's a global market. These prices are set in global commodity markets. But the risk of supply outages in other parts of the world is much higher than is here in the US.
I'm curious. I mean, Chevron has made some big investments in the Middle East in recent times. Here has the situation over the last couple of months disrupted any of that change your plans at all.
We've got some production in Kuwait and Saudi Arabia that has been slowed down as we don't have the ability to evacuate it out of the region and storage is filling, so we've seen some reductions in rates of production. We produce natural gas offshore in the Mediterranean that supplies Israel, Jordan and Egypt. Our facilities there are running at full capacity. We've get some petrochemical joint ventures in the region that are cut back in terms of their production. So we're
feeling this. We're less exposed to the Middle East than some of our peers, and so on a relative basis, the impact that our company has been lower than it has been for some others.
I feel costs you about three billion dollars in the most recent quarter. A lot of the volatility that we've seen in this market. I am curious as to how you forecast going forward without necessarily being able to necessarily forecast military diplomatic solution to all of this.
Well, Forecasting in a commodity business is always a challenge because we have to assume what commodity markets will do and they surprise us. What we're doing now is really work with scenarios, and so we look at different scenarios for when things might resume to a more normal state. What that means for supplying the world. What it also means for demand as you see demand adjustments, and so we can't predict what the price will be and what
supply and demand will be. We're looking at a range of alternatives and trying to use those to inform decision making.
And Mike, we only have about thirty seconds off of you, but do you have any plans to increase production in places such as the Permians such as our as we talk about these supply shortfalls.
Yeah, we're up a quarter on quarter, same quarter last year, five hundred thousand barrels a day, So we are growing. Our plans are to grow seven to ten percent globally this year. Demand is growing about two percent, So we're investing to grow at a rate greater than global demand. Is and those supplies are sorely needed in the market.
Mike really appreciate you taking time for us the year visy absolutely, Mike worked there the CEO of Chevron Alive from the Milken Conference here in Beverly Hills, California,