Energy This Week: do oil reserves matter? Another Red Sea ship sinking, & heatwave + electricity cuts stalk the Middle East

https://www.thenationalnews.com/newsletters/energy-this-week

Do oil reserves matter any more?

Fossil fuel demand in developed countries has probably passed its peak, according to the Energy Institute’s annual Statistical Review of World Energy. But consumption in China was up 6 per cent, and in India, 8 per cent. Global renewable generation surged 12 per cent to a record high. Emissions of methane, a greenhouse gas, rose in every region except the Middle East. With this year being the hottest on record, it’s a mixed picture of progress and setbacks around the world and the different energy sectors.

Almost the only figures that the Statistical Review doesn’t update any more are those for oil, gas and coal reserves. Once the lifeblood of companies, does the quantity of extractable fossil fuels matter any more?

Oil prices gained for a second week in a row as US crude stocks unexpectedly dropped and fuel demand showed signs of strength. Brent crude settled at $85.24 per barrel on Friday and topped $86 on Monday, though by Tuesday it had given up most of the gains to $85.38. Prices have hovered between $75 and $90 for almost the entire year. The tug-of-war between Opec+ cuts and moderate demand has kept prices in a Goldilocks range of about $80 per barrel since November 2022. Markets seem to need a more active catalyst to break out of this unusual stability in one direction or the other.

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Further ship sinking in the Red Sea highlights continuing energy risks

Oil price torpor comes despite continuing geopolitical risks. A second ship sunk amid Houthi rebel attacks in the Red Sea. Coal vessel Tutor was hit by missiles and a sea drone on June 12, killing a crew member. The Rubymar, with a cargo of fertiliser, was sunk in March. Two more ships were struck on Sunday, one of which was abandoned after suffering flooding. The latest sinking will further deter shipping through the crucial waterway and raise insurance premiums and crews’ danger pay for vessels that still venture there.

As dangers of an Israel-Hezbollah war rise, the Lebanon-based group has warned that it is ready to attack Israeli oil infrastructure. Gas and electricity complexes in the East Mediterranean could also be at risk.

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Newly-founded Med oil company strikes first deal

Mediterranean-centric, UK-listed oil and gas company Energean will sell its assets in Egypt, Italy and Croatia, valued at $945 million, to a new entity controlled by private equity firm Carlyle and headed by former BP boss Tony Hayward. Energean will now be focused on gasfields in Israel and Morocco. Adnoc Drilling has approved a new dividend policy with growth of at least 10 per cent annually over the next five years. Dubai-based firm Sidara is seeking to buy UK oilfield services and engineering company Wood and recently increased its offer price. Wood aims to grow in the Middle East.

The UK’s Labour Party, the probable winner of the July 4 election, will hold to its policy of allowing existing oil and gas licences to continue, despite a Supreme Court ruling against an oil development near Gatwick Airport. Labour has already promised to raise a windfall tax on hydrocarbon producers.

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Spectre of power cuts stalks the Middle East

Kuwait has warned of systematic power cuts as a heatwave coincides with years of underinvestment in its electricity sector. The Ministry of Electricity has published schedules of power cuts of up to two hours. Lebanon will continue to rely on Iraqi fuel oil for its electricity needs through a complex deal, instead of pursuing a more sustainable strategy. The country could turn to gas and solar power to reduce the cost of electricity by 66 per cent. The Middle East cannot afford more power cuts – and short-term fixes have to be replaced by international co-operation on sustainable energy supply.

To keep up with rising demand in Saudi Arabia, Siemens Energy has signed a $1.5 billion contract to provide equipment for two gas-fired power plants in the country’s west and centre. The kingdom is seeking to phase out oil-fired generation in favour of gas and renewables.

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1,300 die in Hajj pilgrimage as severe heat grips world

As heatwaves sweep the world from the US to Greece and China, The National looks at 14 of the hottest places in the world, by various measures. Last Wednesday, Delhi experienced overnight temperatures of 35.2°C the hottest for more than 12 years. Several deaths from heatstroke have been reported. This year’s monsoon, which should bring some relief from the heatwave, is making slow progress.

More than 1,300 pilgrims died during this year’s Hajj, with most of the deceased succumbing to heat-related problems, as temperatures in Makkah reached 51.8°C. Iraq’s government has cut public-sector working times by an hour to try to help people cope with the heat and save electricity, while doctors have warned UAE residents and visitors to take care as temperatures approach 50°C. People in hot weather are only 4°C away from heatstroke and possible death.

After the UAE’s floods in April, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, approved a Dh30 billion ($8.16 billion) project to improve rainwater drainage

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Political will needed to solve climate crisis – but not enough

“The climate crisis is a crisis of political will”, Selwyn Hart, a special adviser on climate to the UN Secretary General, Antonio Guterres, has told a summit in London. But, while politicians have often dithered and been overcautious, they cannot get too far ahead of public opinion. As recent election results in Europe suggest, climate policy needs to be bolder but also smarter.

French climate ambassador Kevin Magron said at the event, that politicians should offer a “more desirable future to people” and a “more positive narrative” around tackling climate change, that people should not see climate action as “imposed on populations and societies” and “something which we're going to suffer”.

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EV building and buying on the up in the UAE

Abu Dhabi’s clean energy company Masdar will acquire Greek renewable firm Terna Energy in a deal valuing it at €3.2 billion ($3.43 billion). Terna is working towards a capacity of 6 gigawatts by 2030, which will contribute to Masdar’s overall goal of 100 gigawatts by that year. Masdar aims to “grow beyond tenfold” in the US, its regional head told a conference on Tuesday. “Our biggest source of growth will be in the US”, Philip Haddad added. “We’re here for the long term”.

SingAuto from Singapore plans to build the “world’s largest” commercial electric vehicle industrial district in Abu Dhabi, one of five manufacturing hubs it intends to set up worldwide. Supercar maker Bugatti has unveiled its first hybrid model, the Tourbillon, with 1,800 horsepower, 60km of all-electric range, and a price of $4 million. Electric vehicles could be more than 15 per cent of sales in the UAE by 2030 – and more charging stations could encourage other drivers to go electric. However, a fire at a lithium battery plant in South Korea, which killed at least 16 people, is a reminder of the desirability of safer battery technologies.

The second phase of the EU’s Carbon Border Adjustment Mechanism goes into effect at the start of 2026, requiring importers of certain energy-intensive goods to buy carbon emission certificates. This could increase the cost of materials such as cement, iron and steel and fertilisers by an average of 10 per cent. This represents an opportunity for Middle East manufacturers, who can produce low-carbon materials using renewable or nuclear energy, hydrogen or carbon capture and storage.

The UAE’s focus on renewable energy will be crucial to reducing emissions and creating jobs, writes Masdar’s Ali Alshimmari. And cities are at the centre of the climate crisis: as causes, victims and solutions writes UN Climate Change High-Level Champion Razan Al Mubarak.

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Dr Al Jaber: AI to unlock energy value

Artificial intelligence can unlock substantial value from the energy system, Dr Sultan Al Jaber, Cop28 President and Minister of Industry and Advanced Technology, has told Microsoft’s vice chairman, Brad Smith. Dr Al Jaber pointed to improvements in energy efficiency, better use of grids, and integration of renewables. Separately, researchers in Edinburgh have developed a new AI-based system which can predict crop yields six months before harvest. This could help cut water and fertiliser needs and improve output.

Preserving about 17,000 conservation sites around the world could ensure the survival of many of the most endangered species. 148 of these are in the Middle East, 78 of them alone in Yemen.