Energy This Week: Houthi tanker attack, big oil & gas find offshore Kuwait, & $4 trillion value for carbon capture?

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Oil prices shrug off new Houthi tanker attack

Houthi attacks on Red Sea shipping have continued, but oil prices have continued to play down any threats to the market. An explosion from a seaborne drone hit the MT Chios Lion, a Liberian-flagged crude oil tanker, on Tuesday. In a separate incident, a small Comoros-flagged tanker capsized near Oman’s industrial port of Duqm on Monday while on its way to the Yemeni port of Aden. Its 16-person crew is still missing.

The US Energy Information Administration predicts a global oil market deficit next year, expecting that the Opec+ group will extend some of its production cuts. The EIA raised its demand estimate for 2025 by 200,000 barrels per day to 104.7 million bpd, with production at 104.6 million bpd. It expects Brent prices to average $89 per barrel in the second half of this year, from $84 in the first half.

Inflation in the US eased last month, raising hopes of an interest-rate cut in September, which would help support oil prices. Nevertheless, oil prices inched down on Friday, with Brent closing at $85.03 per barrel and also dropping more than $1 on Tuesday.

Air travel boom to drive long-term oil consumption

The International Monetary Fund has cut its forecast for Middle East economic growth, because of conflicts and its anticipation of continued oil production curbs. These took the IMF’s projections for Saudi Arabia’s growth to 1.7 per cent this year from 2.6 per cent, and 4.7 per cent next year from 6 per cent.

Airbus expects global air travel to more than double long term. Although 45 per cent of new plane deliveries will replace older, less fuel-efficient models, aviation should still be one of the main drivers of growing oil consumption in the next 20 years. Fuel efficiency could save 25 per cent of carbon dioxide emissions across Airbus’s fleet with sustainable aviation fuels and, from 2035 onwards, hydrogen will be crucial to eliminating greenhouse gas releases.

Blue-chip partners enter Adnoc’s new Liquefied natural gas project

Adnoc’s flagship gas project has attracted four top international partners. Shell, BP, TotalEnergies and Mitsui will each take a 10 per cent stake in the Ruwais liquefied natural gas plant. Shell and Mitsui will also buy liquefied natural gas from the centre when it begins production, anticipated in 2028. Up to 70 per cent of output has now been committed.

Adnoc Gas is also progressing its domestic gas expansion, awarding $550 million of contracts to expand the gas network from 3,200km to 3,500km, especially boosting capacity to the Northern Emirates. Ownership of the pipeline expansion project will be transferred to the parent company, Adnoc.

Big offshore oil and gas find for Kuwait

Kuwait has long had problems with shortages of domestic gas, requiring it to turn to imports. Oil production has also struggled to keep up with expansion goals. Its first major offshore discovery could change that. Al Nokhatha field contains 2.1 billion barrels of light oil and 5.1 trillion cubic feet of gas.

Iraq has its own energy problems, but it has stepped in to help Lebanon from its seemingly unending electricity drought. Iraq will supply fuel to two Lebanese power plants in return for unspecified goods and services.

Two billionaires have been active in making energy deals. Mukesh Ambani’s Reliance Industries is raising at least $500 million to refinance debt for Ethane Crystal, a subsidiary which buys ships to transport the petrochemical feedstock ethane. And Mexico’s richest person, telecoms tycoon Carlos Slim, will invest $1.2 billion to develop the deepwater Lakach gasfield.

$4 trillion from carbon capture by 2050?

Could carbon capture be a $4 trillion market by mid-century, as oil firm ExxonMobil suggests? Environmentalists dislike it, but if the technology can make money, it will play a crucial part in tackling difficult corners of climate change. In turn, this makes it an essential part of a sustainable and profitable future for the Gulf oil and gas producers.

Will Europe's tariffs on Chinese electric cars backfire?

Renewables are not growing fast enough to meet the Cop28 aim of tripling global capacity by 2030, according to a report from the Abu Dhabi-based International Renewable Energy Agency. Capacity needs to grow 16.4 per cent annually but rose last year by 14 per cent. It still marked an improvement on the historic average of 10 per cent.

Europe’s tariffs on Chinese electric vehicles are intended to ward off allegedly unfair competition. But they could backfire. China’s carmakers such as BYD should remain competitive despite the levies. They are also expected to establish plants outside China in countries such as Turkey which has a customs union with the EU. European car makers, meanwhile, need to upgrade their technological edge in software, batteries and chip design.

Ocean current changes could chill Europe

Europe is much warmer than its northerly location would suggest – Germany is as far north as Alaska. But, while global warming heats most of the world, Europe could freeze. Changes in ocean winds could disrupt the Gulf Stream, one of a system of Atlantic currents that bring warm water to the continent. Research by University College London, published in Nature, indicates a collapse of these currents could cool Europe by 10 to 15°C, potentially disastrous for agriculture and everyday life.

Abu Dhabi has made major progress on its environmental aims, announced last year. These include:

· Planting more than 1 million mangrove seeds

· Planting 800,000 pieces of coral

· Building a smog-free tower on Al Hudayriyat Island to improve air quality

· Recovering more than 1,000 tonnes of plastic waste

· Increasing water recycling to 72 per cent

· Meeting 45 per cent of electricity demand from low-carbon sources – nuclear and solar power

Dubai’s planned beach expansion will safeguard the coastline from rising sea-levels and provide a habitat for mangroves, turtles and corals.