Chevron Corp. CEO John Watson is stepping down as leader of the U.S.-based multinational oil giant, the Wall Street Journal reports, citing sources familiar with the matter.

Why it matters: The next CEO of the second-largest U.S. oil company behind Exxon will have to reckon with how the firm — and the industry — will position itself amid middling oil prices, projections that global demand could peak within a couple of decades, and the global push for carbon constraints.WSJ reports that refining specialist and current Chevron vice-chairman Michael Wirth is the leading candidate to replace Watson: "Chevron directors see Mr. Wirth's years of experience wringing costs out of big plants that process fuel and chemicals as a critical need in a new era for oil markets defined by low prices."

A Chevron spokesperson would not confirm to Axios that Watson, who is 60, is leaving. WSJ reports that the transition is expected to be announced in September and that the planned departure of Watson, who has been at the helm since 2010, is on "amicable terms." He's expected to remain for some time after the announcement for an "orderly transition."