Shell CEO: Oil swings could threaten global recovery

Shell CEO Wael Sawan warned in recent public remarks that sharp swings in oil prices could threaten the fragile global economic recovery. He noted that price volatility can feed higher inflation and disrupt business investment and household spending.

Sawan pointed to several drivers of volatility, including tight spare production capacity among major producers, geopolitical tensions and changes in demand as economies reopen and energy consumption patterns shift.

He noted that sudden price rises increase costs for households through higher gasoline and heating bills and can prompt companies to delay hiring or large capital projects. Rapid price drops, he added, can discourage investment in oil and gas supply and raise the risk of shortages later.

Sawan addressed how volatility affects energy companies, noting firms must weigh new oil and gas development against shareholder returns and investments in lower-carbon energy. When prices are unpredictable, companies may be reluctant to commit to long-lead projects.

He urged policymakers and market participants to improve transparency on supply and demand fundamentals and to coordinate strategic reserves and production policy. He argued that clearer market signals would help businesses plan and reduce the chance that energy-price shocks spill into the wider economy.

Recent market moves illustrate the risks Sawan described: oil prices plunged during the 2020 pandemic, rose as economies reopened and supply adjustments lagged, and were influenced by Russia’s invasion of Ukraine and OPEC+ production decisions. Longer-term factors cited include underinvestment in new fossil-fuel capacity and faster deployment of electric vehicles.

Central banks track energy costs closely because changes in fuel and transport prices affect headline inflation and can influence monetary policy. Shell, one of the world’s largest energy companies, is managing investments across oil and gas and low-carbon businesses while meeting shareholder targets.