CERAWEEK energy conference kicks off as conflict in Ukraine leaves oil market in turmoil

March 7 (Reuters) – The world’s largest gathering of energy industry leaders kicks off in Houston on Monday as Russia’s invasion of Ukraine sends an oil shock to the global economy and leaders in difficulty are facing growing criticism for the industry’s role in climate change.

Global oil prices soared to levels not seen since the 2008 financial crisis as disruption to Russia’s crude and fuel exports left the world short of supplies, driving up energy costs and slowing down Economic Growth.

Tensions continued to mount over the weekend, with the United States and the European Union considering an outright ban on buying energy from Russia. Overnight, Brent crude briefly touched $139 a barrel – not too far from its all-time high of $147.50. Read more

Join now for FREE unlimited access to Reuters.com

Register

Until now, the United States and the EU had not specifically targeted these sales, which amount to 4 to 5 million barrels per day (bpd) of crude, more than any other country outside the EU. ‘Saudi Arabia. European countries account for about half of these purchases, according to the US Energy Information Administration. Read more

“The conference is definitely going to have a different tone than it would have had a week or two ago,” said Daniel Yergin, vice president of S&P Global, which is presenting the conference.

This year’s CERAWeek is expected to attract more than 4,500 attendees and a program drawn up long before Moscow’s invasion of Ukraine – Russia calls its actions a “special operation” – includes many presentations on the energy transition, including a kick-off discussion Monday with U.S. climate czar John Kerry.

But global turmoil upended the agenda, where some scheduled speakers, including Saudi Energy Minister Abdulaziz bin Salman, canceled plans to speak.

“Given the strain of this growing oil crisis unfolding, it may simply not be possible for him to take four days to be out of the country,” said Yergin of S&P Global.

Saudi Arabia is part of a grouping known as OPEC+ – members of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – which has maintained its current supply increase program 400,000 bpd each month to restore production cuts dating back to 2020 .

The United States and others have called on OPEC+ to increase production — but producers consistently fall short of targeted increases, and countries with spare capacity, like Saudi Arabia, are reluctant to use it.

“We believe the Kingdom could potentially be willing to resume its role as central banker and attempt to avert a calamitous global economic crisis,” RBC Capital Markets analysts wrote on Sunday.

This has tightened already tight supplies, adding pressure on oil companies to increase production. But after cutting spending and production at the height of the COVID pandemic, the industry hasn’t been able to keep up with consumption growth: the United States still produces more than a million barrels in below their 2019 peak of 13 million bpd.

“I think years of economic downturn and regulatory sanctions have taken their toll and it’s going to be a lot harder than people realize,” said Josh Young, chief investment officer at Bison Interests.

Proponents of greater use of renewables say further investment in fossil fuels will only increase the world’s dependence on oil and gas at a time when the climate continues to warm – and Russia’s actions make the transition to cleaner fuels more desirable.

Russia exports between 4 and 5 million barrels of crude per day and around 8.5 trillion cubic feet of natural gas per year.
Join now for FREE unlimited access to Reuters.com

Register

Reporting by David Gaffen; Additional reporting by Liz Hampton; Editing by Kenneth Maxwell and Toby Chopra

Our standards: The Thomson Reuters Trust Principles.

Comments are closed.