Are we back to fundamentals as oil prices tank further?

For the second successive session this week oil prices have slid further and faster. After Monday's declines of over 2%, Tuesday has logged fresh intraday drops of as high as 5%. 

At the time of writing this post, The Oilholic noted that Brent and WTI front month futures contracts had breached their respective $74 and $70 per barrel floors. Headwinds are in fact gathering momentum and yet lower prices may follow. 

Over the weekend, China's promised economic stimulus underwhelmed the market with its vagueness. Then came a revelation that OPEC - deemed the most bullish of the crude oil demand growth forecasters - had revised its prediction lower for 2024 below 2 million bpd. The IEA's prediction is below 1 million bpd. 

And if that wasn't bearish enough, media reports, led by The Washington Post, also suggested on Tuesday that Israel may not attack Iran's oil facilities as feared. So has the risk premium effectively decoupled and are we now back to market fundamentals driving the oil price again? Largely yes in an oversupplied market. But then again not a complete yes yet, as its contingent upon what Israel may or may not do next! 

That said, outlandish $100 per barrel oil price predictions can once again take a back seat. That's all for the moment folks! Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo: Oil production site. © jplenio / Pixabay, 2018. 

Risk weighting oil in the current climate

The last few weeks have been relentless in terms of geopolitical developments and their impact on the oil market - albeit a somewhat oversupplied one with plenty of barrels to more than meet global demand. 

From the lows of September last seen in December 2021, the Brent front-month contract has ended the current trading week posting its highest weekly rise in almost two years. The reason is a bit more complicated than yet another escalation of tensions in the Middle East.

On Tuesday, Iran hit Israel with a barrage of ballistic missiles in response to its "aggressive acts," including the killing of Hezbollah leader Hassan Nasrallah in Lebanon.

With speculation rife about Israel's impending response to Iran, Brent futures stemmed their decline towards $70 per barrels and started inching up towards $80. The inching quickly turned climbing on Thursday after US President Joe Biden decided to make an "off the cuff" remark about discussing with Israel if it could go after Iran's oil facilities. 

Four key ones spring to the Oilholic's mind as yours truly noted in an article for Forbes. These sites may well have a target on their back but any potential Israeli action does not need to be spelt out by a sitting US President 4 weeks from a presidential election. 

Cue a 5.5% spike in Brent futures on Thursday, followed by another 2% today, bringing prices closer to $80. That prices are still below the $85 level seen at the start of the third quarter last year, as well as earlier this year, is down to the fact there is plenty of crude in the market at a time of uncertain demand. 

So the question is where do we go from here? In that respect, things are pretty much as they were at the start of the week when the Oilholic was interviewed by Reuters, i.e., risk weighting for front-month oil futures is currently contingent upon what Israel might do next and if there is a direct confrontation with Iran.

It is now (almost) guaranteed that such a confrontation is now not a question if but when, as yours truly said on subsequent back-to-back BBC News interviews following Iran's attack on Israel on Tuesday and Biden's astounding intervention on Thursday. 

Now, if its a case of simple mathematics, Iran's 1.7 million barrels per day (bpd) in oil exports, mainly to China, can be taken care off by the rest of the market should they be knocked offline by Israel. Because as things stand, the crude market will likely end this year and start the next with a surplus.

However, should the conflict broaden to engulf the Gulf and hit exports from Saudi Arabia, UAE, Bahrain and Qatar, as well as hold-ups in the Strait of Hormuz, we would almost certainly be looking at an upward lurch to $100 Brent prices. Where this goes is anybody's guess and all eyes are now on Israel. Well that's all for now folks! Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo I: Oil pump jack building block model at the AVEVA World 2023 Conference, Moscone Center, San Francisco, US. © Gaurav Sharma. Photo II: Gaurav Sharma on BBC News on October 3, 2024 © BBC. 

Media missives from Gastech 2024

With Gastech 2024 drawing to a close on September 20, the Oilholic capped a fascinating and engaging week in Houston by hosting two pivotal industry fireside chats with H.E. Hardeep Singh Puri, Minister of Petroleum & Natural Gas, India and Chris Ashton, CEO of Worley.

And it was wonderful moderating multiple panel sessions on subjects ranging from harnessing the potential of natural gas for powering AI to solutions for the decarbonization of the global transport complex and climatetech finance.

Yours truly also hit the airwaves to discuss the energy market and developments at the conference. The final broadcasting call before departing was with the BBC, with this blogger's week out in Houston peppered with plenty of other missives via the keyboard for Forbes, and of course via this blog.

All blog entries for each Gastech may be found here. And here are selected Forbes copies in chronological order based on soundbites and insight from the event. 

• Energy Bosses Demand Clear And Consistent U.S. Policies On Natural Gas, September 18, 2024.
• India’s Energy Source Shifting Agility Will Define Its Transition, Says Oil Minister, September 20, 2024.
• UK’s Cleantech And Green Energy Focused ‘Wealth Fund’ Is Anything But, September 24, 2024.

And that's a wrap for Gastech. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo: Gaurav Sharma on BBC News on September 18, 2024 © BBC. 

Gastech Days III & IV: Harnessing the power of natural gas and climatetech

Over the course of Thursday and Friday - days III & IV - of Gastech 2024 that put us on the home stretch towards the conclusion of global event, many of the conversations revolved around climatetech and harnessing the power of natural gas as a destination fuel in the world's march to a low to a zero carbon future. 

An action packed agenda was underpinned by several movers and shakers in the natural gas space especially LNG terminal developers and operators from Venture Global LNG to Mexico Pacific. 

Meanwhile, energy major Shell emphatically declared its intentions of continuing to expand its global LNG portfolio predicated in its belief of an expected industry growth of 50% by 2040. It also noted that North America's total upcoming LNG exports alone could account for around 30% of global demand by 2030. 

Many thought leaders also echoed each others' belief that decarbonizing industry and transportation would involve natural gas in close step with emerging technologies. Yours truly hosted panels on both transport sector decarbonization as well as climatetech on Thursday. 

The first of these was titled - Decarbonizing heavy transportation: Collaborations to address the acceleration of climate technology solutions from development to deployment. The panellists included Sukhmal Jain, Director (Marketing) & Board Member, Bharat Petroleum Corporation Limited, Yoki Firnandi, CEO, PT Pertamina International Shipping, Meg Gentle, Executive Director, HIF Global and Mark S. Brownstein, SVP, Environmental Defense Fund. 

Decarbonizing heavy transport, specifically shipping, aviation and HGV remains a key challenge in addressing climate change. 

The panellists discussed how to steer the transport industry to net zero by 2050, robust strategies that will be needed to stimulate supportive policies, innovation in technologies and collaboration across the value chain to drive the adoption of low- and zero-carbon fuels.

We also discussed some of the barriers to investment in zero-emissions fuelling infrastructure, including biofuels, hydrogen and clean ammonia, which can pave the way for achieving their long-term supply and the climate benefits of decarbonization and some of the incentives that may be required. 

Next yours truly's attention turned to climatetech via a panel titled - Fostering greater climate technology innovation, deployment, and scale across the value chain. Eminent panellists included - Mahdi Aladel, CEO, Aramco Ventures, Paula Gant, President & CEO, GTI Energy and Vikas Dhole,  Vikas Dhole, GM of Project Management, AspenTech. 

Climatetech innovation holds the key to ensuring a significant decarbonization of energy systems and GHG emissions reductions. 

The panel deliberated how governments, the energy value chain and the emerging climate technology market overcome challenges related to scalability, matching market demand with new energy supply and a lack of the workforce skills needed to drive further adoption and deployment of low-carbon technologies.  

As proceedings began to wind down late on Wednesday and early Thursday, attention turned to passing the baton on to next year's Gastech destination - Milan - which was revealed as the next host city for Gastech 2025. 

Simon Ford, Vice President, Gastech, dmgevents, said this year's event had seen participation of attendees from over 150 countries, including 50 official government delegations. 

The occasion was marked a lovely launch evening party before everyone bid goodbye to H-Town following an insightful and fantastic energy event that will live long in the industry's memory. Well that's all from Gastech 2024. See you at Gastech 2025 in Milan. Keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo I: The George R. Brown Convention Center, Houston, Texas, U.S. - Venue of Gastech 2024. Photo II: Gastech 2024 Strategic Panel on Decarbonizing heavy transportation: Collaborations to address the acceleration of climate technology solutions from development to deployment moderated by Gaurav Sharma. Photo III: Gastech 2025 Launch Reception at The Corinthian, Houston, Texas, US. © Gaurav Sharma 2024. 

Gastech Days I & II: Energy transformation through innovation

The first two days of Gastech 2024 have flown by with talking points aplenty and a who's-who of the energy industry in Houston at the city's George R. Brown Convention Center. 

Former US President George W. Bush got things going on Monday night by highlighting his state and country's achievements in the global energy sphere at the Gastech pre-event gala dinner. 

The state of Texas is the US' top crude oil and natural gas producing state. It also has the nation's highest refining capacity by some distance and remains a wind power leader. As Q4 2024 approaches, the US remains world's largest LNG exporter and its largest crude oil producer. 

However, as Day I of Gastech - which is formally running from September 17 to 20 - kicked off on Tuesday, energy bosses bemoaned the lack of clarity and consistency from Washington on policy matters pertaining to natural gas exploration and LNG permits. (Read full report for Forbes here)

The Oilholic kick-started his Gastech 2024 speaking circuit journey on Tuesday as well, with India's Minister of Petroleum and Natural Gas Hardeep Singh Puri - a seasoned diplomat turned politician and a lively keynote speaker at international events. 

Our fireside chat was titled 'Energy transformation through innovation and investment'. It also served as a curtain raiser for India Energy Week 2025. 

Puri explained how India was managing the cyclical volatility in the energy market, its efforts aimed at improving energy diversity, investments in renewables and a call for changing the paradigm from a production-oriented approach to a more consumption-oriented approach. All at a time when oil prices are currently lurking around 2021 lows. 

The event's exhibition floor also opened its doors on the first morning for the 4-day event, with 800 exhibitors and 20 international country pavilions. Overall 50,000 attendees are expected this week, with 7,000 delegates from 125 countries. 

Later on Tuesday, yours truly also hosted a pivotal panel discussion titled 'Harnessing the advantages of natural gas to fuel the artificial intelligence (AI) revolution.' 

The panellists included Rebekah Eggers, Global Client Engagement & Innovation Director, Energy & Resources Sector, IBM, Arun Kumar Singh, Chairman & CEO, Oil and Natural Gas Corporation Ltd, Ken West, President & CEO, Honeywell Energy and Sustainability Solutions, Naser Al Yafei, SVP, Strategy, Sustainability & Transformation, ADNOC Gas, and Matthew Babin, Head of Energy & Natural Resources, Palantir Technologies. 

The panel touched on the growing need for electricity - often and increasingly generated by natural gas plants - to power data centers and fuel the AI revolution. This is expected to drive a surge in natural gas demand. 

Some panellists noted that natural gas is the most cost efficient energy source capable of delivering the round-the-clock, reliable power required by tech giants. Others said AI itself could chalk sustainable future pathways predicated on renewables. 

It better be, for according to the International Energy Agency (IEA), global power demand from data centers could skyrocket to over 1,000 TWh by 2026 – double the levels seen in 2022. 

It is a subject area yours truly rounded up the first day of Gastech 2024 with a BBC Business Today interview with Sally Bundock. We talked about the complexities and opportunities of using natural gas to power the AI revolution which seems to be the most plausible near-term solution. 

Day II - Wednesday - brought further profound discussions on the energy transition and learning to do more (in terms of throughput) with less (energy). It is something the engineering, procurement and construction (EPC) segment is taking pretty seriously. 

The Oilholic touched on the subject in a fireside chat with Chris Ashton, CEO of Worley, who discussed how contractors manage these variables in today’s operational landscape and are having to contend with a high interest rate and inflation climate in a very competitive industry. 

Ashton also offered perspectives on how AI, new technologies and innovative approaches are revolutionizing energy networks, power grids and gas infrastructure, and how these advancements contribute to the efficient and cost-effective completion of projects to accelerate the path toward net zero. 

That's all for now folks. There's plenty more to come from yours truly from Gastech. So keep reading, keep it here, keep it 'crude'! 

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© Gaurav Sharma 2024. Photo I: Houston's George R. Brown Convention Center, the venue of Gastech 2024. Photo II: Gaurav Sharma holds a fireside chat with Hardeep Singh Puri, Minister of Petroleum and Natural Gas, India on 17.09.24. Photo III: Gastech 2024 exhibition floor. Photo IV: Gaurav Sharma on BBC World Business Today on 17.09.24 at 11:46 CDT. (Courtesy: BBC) Photo V: Gaurav Sharma holds a fireside chat with Chris Ashton, CEO of Worley on 18.09.24.