Energy This Week: rain, Iran strikes leave oil unmoved, & unsure of Shell
Oil prices unmoved by Iran-Israel conflict
Iran’s attack on Israel did not move oil markets in the short term. After gaining on Friday with war clouds over the Middle East, prices fell a little on Monday, the first trading day after the attempted drone and missile strikes, with Brent crude slipping below $90 per barrel. However, analysts feel the escalating conflict brings $100 per barrel prices closer. The International Energy Agency has revised its demand estimates for this year to about 100,000 barrels per day lower on expectations of lower industrial activity in Organisation for Economic Co-Operation and Development countries, widening the gap with Opec’s forecasts.
Russia’s war against Ukraine is increasingly damaging energy assets. Russia has ramped up its attacks on Ukraine’s electricity, heating and gas systems, while its foe responds by targeting oil refineries. Ukrainian drones could strike 3.8 million bpd of Russian refining capacity, more than half the country’s total, with another 600,000 bpd at risk if the weapons’ range is extended. British Defence Minister Grant Shapps says an anti-drone laser might be ready soon and could be provided to Ukraine. It could also be used to tackle the threat of Houthi drones to shipping in the Red Sea.
Two Russian billionaires who made much of their money from selling oil company TNK-BP in 2013, Mikhail Fridman and Petr Aven, have won their appeal against EU sanctions imposed over the February 2022 invasion.
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'Sure of Shell' – but Shell not sure of London
Major European oil companies including Shell and BP are battling much lower valuations than their US rivals. They have tried to fix their core business, but struggle with the tension between greening themselves and competing in low-carbon businesses while capitalising on their oil and gas assets and expertise. Facing indifference from investors and hostility from their home governments and environmentalists, might they look for a friendlier welcome across the Atlantic?
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Energy conferences advance hydrogen amid the rain
The World Future Energy Summit in Abu Dhabi is the country’s first big energy event since November’s Cop28. Former UK prime minister Boris Johnson appeared at the Green Hydrogen Summit alongside ministers from Azerbaijan, which hosts Cop29 this year, Japan and the Netherlands. The ministers called for more investment to lower hydrogen prices, while Mr Johnson said the UAE and Britain should deepen their co-operation in artificial intelligence, batteries and nuclear power. Middle East Energy was also to be held in Dubai this week, though it was unfortunately postponed due to rain.
New York is also hosting two major energy gatherings this week. The Columbia Centre on Global Energy Policy considered complex energy geopolitics, rising electricity demand, the effects of artificial intelligence, and financing the energy transition in developing countries on Tuesday. The UN is holding its first Sustainability Week. Dennis Francis, president of the UN General Assembly, will outline that the 675 million people without access to electricity and the 2.3 billion who rely on polluting fuels for cooking need clean, modern energy.
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2023 might be a peak year for emissions – but soil carbon danger looms
Last year was the hottest year on record, with average temperatures 1.5°C above the post-industrial average. However, it might also be the turning point for greenhouse gas emissions. Renewables and electric vehicles are growing strongly, emissions rose by less than 1 per cent in 2022 despite higher energy demand, but China and India need to begin reducing coal usage.
Brazil is a significant player in biofuels. Now Atvos, one of the country’s industry leaders, backed by Mubadala Capital, will build a $69 million plant to turn sugarcane waste into renewable natural gas.
Tesla has suffered further share price falls. Its stock has now fallen about 31 per cent this year, with analysts downgrading their forecasts for deliveries of its electric vehicles this year.
The Earth’s soil contains vast amounts of both organic and inorganic carbon – as much as 2.3 billion tonnes of the second type. Soil acidification and disturbance by farming could release this, worsening global warming. Deforestation in Brazil slowed last year, but the world lost an area of primary forest the size of Switzerland. This destroys natural habitats and contributes about 10 per cent of global warming, and communication on sustainability needs to avoid buzzwords and be translated into local languages to be fully accessible.