Chevron Corporation’s CVX CEO Mike Wirth asserted that the company is maintaining its shipping routes through the Red Sea, despite the escalating threat posed by Houthi rebels. In an interview with Bloomberg on Tuesday at the World Economic Forum in Davos, Wirth stated that the company has made no “fundamental changes” to its shipping routes.
Houthi rebels, who have been engaged in a long-standing conflict with Saudi Arabia, recently indicated their intention to expand attacks in the Red Sea to include U.S. ships. Despite these threats, Chevron is actively collaborating with naval authorities in both the United States and the Middle East to ensure the safe passage of its cargoes through the region, Wirth affirmed.
This announcement contrasted with Shell plc’s SHEL recent decision to indefinitely suspend all shipments through the Red Sea following strikes on Houthi rebels by the United States and the United Kingdom. The Wall Street Journal reported on Shell’s move, citing concerns over the potential escalation of armed conflict in the area. Notably, last month, BP plc BP, another major energy company, also temporarily halted its shipping operations in the Red Sea.
The Red Sea, a crucial maritime route linking Europe to the Middle East via the Suez Canal, is experiencing heightened geopolitical tensions. This has led companies to reconsider the risks of navigating through the region.
However, Chevron’s commitment to maintaining shipping activities through the Red Seasets it apart from other major oil companies that have adopted a more cautious approach. Wirth highlighted the company’s careful safety approach, noting that for each voyage, it has a special plan. The evaluation of the situation is conducted on a ship-by-ship basis, with no fundamental changes made to the way ships have been moved in the past few weeks.
Wirth added that the ongoing conflict in the Middle East has not yet caused a significant surge in oil prices. He noted that, so far, the U.S. shale production has played a crucial role in offsetting market concerns. However, he warned that any blockade in the Persian Gulf could result in a “significant supply shortfall,” which could have a profound impact on global markets.
Zacks Rank & Key Pick
Chevron currently carries a Zacks Rank #4 (Sell).
A better-ranked stock in the energy sector is Vaalco Energy, Inc. EGY, sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Vaalco Energy is an independent energy company involved in upstream operation business with a diversified presence in Africa and Canada. Having a large inventory of drilling locations in premium Canadian Acreage, the company’s production outlook seems bright.
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