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Geopolitical risks are top of mind for oil companies’ CEOs concerned about global energy security as two wars in the Middle East and a standoff between the US and China risk flaring up, the heads of energy majors said during the ADIPEC conference Nov. 4. As the US prepares to go to the polls in closely contested Presidential elections, CEOs from BP, Shell, Eni and Petronas said the outcome of US relations with China will have wide-reaching impacts on global oil demand given the scale of the Chinese market and its key position in the supply chain for renewable energies such as solar power and electric vehicles.
In the Middle East, the war between Israel and Hamas in Gaza and Hezbollah in Lebanon has seen effects play out as far as the Red Sea, where Iran-aligned Houthi militants have launched attacks on ships traversing the sea off the coast of Yemen, disrupting the flow of energy and raising transit prices. BP CEO Murray Auchincloss said the conflicts in the Middle East, as well as the security of the company’s people and energy flows are a major concern. The outcome of the US election weighs more heavily for the Auchincloss of BP – as 60% of BP’s business is in the US and its BXP unit is a major shale producer.
“We always work comfortably with whoever wins the election,” Auchincloss said. “The big challenge that the US faces right now is regulatory reform, permitting reform. That’s the thing that whoever wins the election needs to tackle to make it easier and faster to invest in the United States.
” Oil price volatility has surged in recent months as the Middle East crisis, China’s economic stimulus plans, and uncertainty over near-term OPEC+ production policy buffets market sentiment. Platts, part of S&P Global Commodity Insights, assessed Dated Brent at $74.17/b on Nov.
1, down from $81.20/b from a recent high on Oct. 7.
“We’re passing through a very volatile situation,” said Eni CEO Claudio Descalzi. “This is going to last in 2025, in terms of price and turmoil.” The Biden administration has passed two acts aimed at encouraging investment into the country: the Bipartisan Infrastructure Investment and Jobs Act of 2021, which allocated around $550 billion for clean energy and infrastructure, and the US Inflation Reduction Act (IRA) of 2022, which provides an estimated $370 billion in funding and includes tax credits to incentive investment and make American clean energy projects more competitive.
The outcome of the election could also change the expected impact on IRA green spending. Although a Trump win is not expected to see to full repeal of the IRA, a change of administration could attempt to change tax credit provisions that have yet to be finalized. Further out, the energy major executives also said they are focused on ensuring there is sufficient oil and gas supply as long as there is demand for it.
Shell’s CEO Wael Sawan questioned the IEA’s recent long-term energy outlook that expects peak oil demand by 2030, pointing to rising demand in certain geographies. “Oil demand is here to stay,” said Tengku Muhammad Taufik Petronas, president and group CEO. Source:.
