Chevron CEO Criticizes Windfall Taxes and Export Bans Amid Middle East War

Chevron CEO Mike Wirth strongly opposed the idea of imposing windfall taxes on oil and gas profits, arguing that such levies would discourage investment at a time when market signals should encourage it. Speaking at Bernstein’s 42nd Annual Strategic Decisions Conference in New York, Wirth emphasized that policymakers should support measures allowing markets to function effectively during the global energy crisis triggered by the three-month-long Middle East war, which began on 28 February 2025. He noted that while some export constraints have been imposed in Asian countries, large consumers and producers have largely avoided such policies, though they remain a topic of discussion. Wirth warned that market-impeding actions may have political appeal but could worsen the situation, whereas actions that help markets function well are the right approach.

Market Conditions and Price Dynamics

Front-month Brent futures traded around $94 per barrel, and West Texas Intermediate (WTI) hovered near $89 per barrel in late April 2025. Wirth highlighted that about 12 million barrels per day of the typical 20 million bpd flowing through the Strait of Hormuz have been cut off since the war began. However, global oil prices have not risen as much as expected due to several factors: above-normal global inventory levels entering 2025, spare oil stuck in tankers from US sanctions on Russia, Iran, and Venezuela (which have since been rolled back), and reduced aggressive buying by Asian refiners at the war’s onset. Wirth cautioned that these buffers are being steadily drawn down, and the market’s ability to absorb imbalances is drastically diminished. He predicted upward price pressures in June and July as these effects flow through to physical prices.

Policy Recommendations and Critiques

Wirth specifically criticized a crude oil export ban, which the US has not implemented, arguing it would constrain market functioning by disrupting production and refinery runs in the medium term, ultimately reducing supply and flexibility, driving prices higher, and worsening the situation. He praised policy moves that have helped, such as reserve releases and the US waiver of the Jones Act, which increases supply and flexibility. Wirth stressed that measures interfering with market functioning are unhelpful, while those that enhance market operations are beneficial.

Infrastructure Costs and Future Energy Security

Repairs to damaged energy infrastructure in the Middle East could cost "maybe tens of billions of dollars," adding further inflationary pressures. Wirth declined to predict which energy sources would be prioritized but stated that markets will reach a new equilibrium focused on energy security. He emphasized that the world will become more concerned about choke points like the Strait of Hormuz, where large energy flows are prone to disruption, and will likely focus on insurance policies or reserves.

Chevron’s Position in Venezuela

Wirth highlighted Chevron’s advantageous position in Venezuela, where it holds the best quality assets after being the only US operator to remain following US sanctions in 2019. The outlook for Venezuela shifted dramatically after US forces captured former strongman Nicolas Maduro in January 2025, leading the Trump administration to steer the country’s oil industry. Chevron is negotiating better financial terms for oil contracts to encourage private investment, with an improving working relationship between US and Venezuelan governments. State-owned PDVSA still owes Chevron payments from old loans, but a mechanism is in place to recoup those dollars for basic maintenance, infield drilling, and well workover activities. Wirth hopes to grow Chevron’s Venezuela production by about 50% by the end of 2028, from its current 250,000 bpd. He noted that the government has changed its hydrocarbon law to a more