Shell CEO warns global oil supply crunch could persist until 2027

The global oil market is facing a high-scale supply shock, with rising fuel prices continuing to impact drivers at the pump on a daily basis.

In an interview with Bloomberg, Shell CEO Wael Sawan issued one of the most direct warnings to date regarding the risks the blockade of the Strait of Hormuz poses to global energy supplies.

Sawan stated that approximately 900 million barrels of oil have gone unproduced over the last several months. The CEO noted that this loss of production has primarily been offset through the drawdown of existing inventories.

As global emergency reserves are depleted to close a persistent production deficit, Sawan indicated he does not hold an optimistic outlook on how quickly this situation might change. He emphasized that supply-demand balances are certain to remain tight in the coming months and potentially for more than a year.

The warning coincided with Shell’s announcement of its $13.6 billion acquisition of Canadian shale producer ARC Resources. This transaction provides significant insight into where one of the world’s most complex energy companies perceives the future of oil supply to lie.

The figures underpinning Sawan’s warnings reveal the scale of the crisis. According to Sawan, the blockade of the Strait of Hormuz has effectively removed approximately 900 million barrels from global supply in recent months. This void has not been filled by alternative production; instead, it has been absorbed by eroding inventories that were not designed to withstand such a prolonged and uninterrupted disruption.

With global inventories already under pressure, Sawan’s warning that the supply crunch could extend until 2027 reflects the potential trajectory of inventory depletion should the blockade persist.

The impact of this market tightness is expected to be reflected directly at the pump. It was noted that pressures on oil prices typically translate into gasoline prices with a lag of several weeks. This implies that even if the initial shock of the conflict with Iran has been weathered, the full effect may not yet have been realized.

According to data previously published on April 21, Goldman Sachs’ March 2026 US inflation guidance estimated that spot oil prices rose from $71 per barrel in February to $103 in March. While the bank’s base-case scenario forecasts Brent oil retreating toward $80 by the fourth quarter of 2026, it warned that risks remain skewed to the upside.

Shell’s operational update for the first quarter of 2026 confirms the extent of the disruption. Integrated Gas production is expected to decline to a range of 880,000 to 920,000 barrels of oil equivalent per day, down from 948,000 barrels in the fourth quarter of 2025. This decrease is attributed in part to the impact of the Middle East conflict on Qatari volumes.

While Sawan voiced these supply warnings, Shell simultaneously executed a major investment demonstrating its commitment to long-term reserve security. According to a company statement, Shell has agreed to acquire Canadian shale producer ARC Resources in a deal totaling $13.6 billion, which includes the assumption of approximately $2.8 billion in debt.

The transaction, financed approximately 25% in cash and 75% in stock, includes the following assets: daily production of approximately 370,000 barrels of oil equivalent, roughly 2 billion barrels of reserves, and a significantly expanded position in Canada’s Montney Basin. This move establishes Canada as a strategic hub for Shell’s upstream exploration and production activities.

Sawan stated that the acquisition transforms Canada into a core hub for Shell, reinforcing the strategy to deliver “more value with less emissions.” The CEO emphasized that the ARC acquisition strengthens the company’s resource base for decades to come.

According to Sawan, Shell had been evaluating ARC Resources for two years prior to the start of the war. He noted that the acquisition was not a panic-driven move resulting from the Strait of Hormuz crisis, but rather a pre-planned strategic decision. However, he acknowledged that the current supply environment has rendered the timing highly opportune. The company expects the deal to deliver double-digit returns and to increase free cash flow per share starting in 2027.