This is how Iran war will change global energy markets, oil executives say

CEOs of major oil and gas companies have told investors on earnings calls over the past two weeks that the world’s energy system will be drastically changed as a result of the Iran war.

Nearly a billion barrels of oil have been lost as a result of Iran’s blockade of the Strait of Hormuz, and with sea lanes remaining closed, the shortage is worsening by the day.

Olivier Le Pouche, CEO of the oilfield services giant, said the disruption showed the fragility of the global energy system. S.L.B..

“It will bring fundamental structural changes to the entire energy landscape,” CEO Lorenzo Simonelli said. baker hughesSLB’s rival.

Mr. Le Pouche and Mr. Simonelli said that governments and industry will prioritize energy security. CEO Jeffrey Miller said this was “no longer just a topic.” halliburtonanother major oilfield services company.

As a result, investment in oil exploration and production will increase, the CEOs said. Simonelli said investment in low-carbon solutions such as geothermal, nuclear power and grid modernization will continue.

“It’s not just about increasing energy supply,” Baker Hughes CEO said. “It’s about robust and resilient energy infrastructure and increasing redundancy, diversifying infrastructure and reducing dependence on a single large asset.”

Diversification of supply

The Hormuz closure particularly highlighted the dependence of Asian economies on the Middle East for imports of crude oil and liquefied natural gas.

“Obviously, people are going to re-evaluate their energy security and how to avoid being exposed to similar risks in the future.” exxon mobil CEO Darren Woods said:

CEOs of oilfield services companies said the government would seek to diversify energy supplies. War-ravaged oil reserves also need to be rebuilt, executives said.

“Global stocks will be rebuilt beyond historic levels to ensure energy security is a top priority,” Simonelli said.

U.S. crude oil will be more important than ever in maintaining global energy security, said the company’s CEO Case Van’t Hoff. diamondback energyone of the largest shale oil producers in the United States. U.S. crude oil exports reached an all-time high during the war.

Miller said the oil market is currently “fundamentally tight” due to supply disruptions. According to him, the market has gone from expecting a surplus this year to a large deficit.

Le Pouche said this would support oil prices rising after the war ends. Higher prices will encourage investment in offshore and deepwater opportunities in Africa, the Americas and Asia, he said.

“Africa has a significant base of untapped oil and gas resources and represents one of the most attractive long-term opportunities,” said SLB’s CEO. “We expect the portfolio allocation to shift more favorably towards this region over time.”