Big Oil Chiefs See Middle East, China as Top Concerns
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Escalating tensions in the Middle East and U.S. relations with China pose the greatest concerns for Big Oil, according to some of the industry’s top executives.
“The conflict in the Middle East is probably the top risk of all right now,” BP Plc CEO Murray Auchincloss said during panel discussion at the Adipec summit in Abu Dhabi. “We operate across five or six countries in the region — we are worried obviously about the security of our people and the security of energy supplies.”
Oil executives have gathered at the region’s biggest energy conference at an extremely volatile time for the market. Israel and OPEC member Iran are increasingly in direct conflict, keeping traders on edge about potential disruptions from the region. Meanwhile, China’s sluggish economy is weighing on oil demand growth.
U.S. relations with the Asian nation are uncertain as American voters prepare to head to the polls on Nov. 5. Republican candidate Donald Trump has vowed to dramatically increase tariffs on China.
The opening day of ADIPEC 2024 concluded in Abu Dhabi, setting a powerful tone for the future of energy as global leaders called for accelerated innovation and collaboration.
Dr. Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and @ADNOCGroup Managing Director… pic.twitter.com/rC5vaopqXQ — ADIPEC (@ADIPECOfficial) November 4, 2024
“Longer term, what happens on the U.S.-China axis” is a concern for oil companies, Shell Plc CEO Wael Sawan said at the conference. The effect it could have on energy demand, supply chains and “the impact it could have on the redrawing of the energy complex globally” are factors companies are watching, he added.
Executives on Nov. 4 said they all expect oil demand to continue to expand — despite the current slowdown in Asia’s biggest economy — even as the world transitions to cleaner energy sources. That in turn will require more investment to keep the market supplied.
“We fundamentally believe the world will need more energy and we fundamentally believe it will need different forms of energy,” Sawan said. He expects oil demand growth of 800,000 to 1 million barrels a day this year.
However, the CEOs’ comments highlight a growing debate on the strength of oil demand. The International Energy Agency in September said global consumption is “slowing sharply” as China’s economy cools, and it has predicted demand will stop growing before the end of the decade.
The Organization of Petroleum Exporting Countries sees demand much stronger than the IEA does, even as OPEC has recently trimmed its growth forecast. Saudi Aramco is also bullish on China’s oil demand following stimulus efforts by Beijing.
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A peak in consumption is unlikely anytime soon, and will even be a while longer than 2030, Muhammad Taufik, CEO of Malaysia’s national oil company Petroliam Nasional Bhd, said during the Adipec panel.
But volatility in oil prices is hurting companies’ ability to invest, which could drive futures higher, according to Eni SpA CEO Claudio Descalzi. While global benchmark Brent crude is trading about 3% lower than at the start of the year, prices have whipsawed in recent months over the demand outlook and Middle East conflict.
The CEOs brushed aside any concerns about the results of the U.S. elections on their own relations with the world’s largest economy.
The U.S. is “really focused on growth” regardless of the outcome, Descalzi said. BP’s Auchincloss echoed those sentiments: “We always work with whoever wins the election very comfortably.”
Written by Kateryna Kadabashy, Anthony Di Paola and Salma El Wardany
