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TotalEnergies CEO Patrick Pouyanné warned that the world will “face some serious supply issues” if the Iran war and the Strait of Hormuz blockade last for more than three months.
Speaking at Semafor World Economy in Washington, DC, on Monday, Pouyanné said that Iran charging a toll for ships to transit through the waterway was not the problem.
“It’s clear that reopening and the free circulation through the Strait of Hormuz, even if you have to pay to anybody, is fundamental for the freedom of markets and global markets,” he said.
He said that if the strait is reopened, “things can come back to normality” within three months, given that the region’s energy production facilities remain largely undamaged.
But, he warned, if the war escalates, and the US attacks energy infrastructure in Iran, prompting Tehran’s retaliatory strikes on Gulf facilities, “you change the magnitude of the problem.”
“Because when you destroy facilities… facilities is not a question of months, it’s a question of years.”
The US on Monday began a blockade of Hormuz after US and Iranian negotiators failed to reach a deal during marathon talks in Pakistan over the weekend.
Still, Pouyanné was optimistic about the negotiations, saying, “You cannot have such a complex issue being solved in 21 hours.”
But he argued that any solution over the war “must absolutely preserve the Strait of Hormuz opening … There is no way to have any agreement if there is still this threat.”
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Pouyanné said the energy crisis will lead countries into considering a push toward renewables.
One of the lessons of the conflict thus far “is that you need to build much more capacities and renewables, onshore solar, onshore wind with batteries,” he said.
The US market is a good match for TotalEnergies objective of longer-term investments of 20 to 25 years, Pouyanné said.
“It’s easier to invest” in the US rather than countries with less political stability such as Venezuela and Iran. “We need to have a global, an economic framework, an ecosystem in a country where we are feeling comfortable because the billions we will invest should deliver money during 20 years.”