CERAWEEK energy conference returns to Houston as Ukraine conflict sends market boiling

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Pump jacks operate at sunset in Midland, Texas, U.S., February 11, 2019. Picture taken February 11, 2019. REUTERS/Nick Oxford/

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March 6 (Reuters) – The world’s largest gathering of energy industry executives returns to Houston this week as Russia’s invasion of Ukraine sends an oil shock to the global economy and leaders in difficulty are facing growing criticism for the industry’s role in climate change.

Global oil prices rose to levels not seen in a decade at more than $115 a barrel as the disruption of crude and fuel exports from Russia left the world short of supplies. Gasoline prices have also reached record highs, leading to a combined rise in energy costs that is slowing economic growth.

“We meet not only at a time of political turbulence, but also of turbulence in energy markets – extreme turbulence of a kind rarely seen,” said Daniel Yergin, author and vice president of S&P Global, who presents the conference.

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The United States and its allies imposed heavy sanctions on Russia. While these efforts have not specifically targeted Russian oil and gas, Russian oil companies are struggling to sell barrels as self-sanctioning buyers to avoid unwittingly falling under existing sanctions or future.

“The idea was not to sanction oil and gas because of their essential nature, but oil is sanctioned by private actors who do not want to take it back or by ports which do not want to receive it and more that lasts, the more the supply chains will become distorted,” Yergin said.

This has exacerbated already tight supplies, adding pressure on oil producers to increase production as global demand surges above pre-pandemic levels. However, after cutting spending and production at the height of the COVID outbreak, the industry has been unable to keep up with consumption growth.

OPEC+ producers, meanwhile, have consistently fallen short of their targets for increased supply, and the number of US oil rigs in operation, though growing, is still 24% lower. to what it was before the pandemic. Read more

Leaders weigh the need for more oil in the short term with the pressure they face to pump less in the long term as the economy shifts away from fossil fuels.

This year’s CERAWeek is expected to draw more than 45,000 attendees and feature plenty of energy transition presentations, including a kick-off discussion on Monday with US climate czar John Kerry.

CERAWeek was canceled in 2020 when the coronavirus pandemic exploded, and last year’s event was held virtually at a time when demand for oil and gas was beginning to rebound in earnest from lockdowns and bans. to travel that were dominating 2020. At the time, top executives, including the CEOs of Shell and BP, suggested peak oil demand might have been reached.

Instead, consumption increased. Energy security will once again be on the agenda of CERAWeek.

“The world will continue to demand more energy, not less. And the question is whether that energy comes from the United States or from hostile regimes like Russia,” said Frank Macchiarola, senior vice president of political affairs, economics and regulatory industry group the American Petroleum Institute.

The United States and its European partners are considering banning imports of Russian oil, US Secretary of State Antony Blinken said on Sunday, but stressed the importance of maintaining stable oil supplies globally. Read more

Proponents of greater use of renewables say further investment in fossil fuels will only increase the world’s dependence on oil and gas at a time when the climate continues to warm – and Russia’s actions make the transition to cleaner fuels more desirable.

High oil and gas prices should encourage fuel demand destruction and make renewables and battery-powered cars more competitive — although $100 oil isn’t necessarily good for the transition. Read more

The average price of a gallon of gasoline in the United States hit $4,009 on Sunday, according to AAA, an auto association, which is the highest since July 2008. Consumers are paying 40 cents more than a week ago , and 57 cents more than one a month ago. Read more

“These prices will affect the way people operate,” Yergin said. “It can make people more interested in electric cars.”

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Reporting by David Gaffen; additional reporting by Stephanie Kelly, Ernest Scheyder and Scott DiSavino; Editing by Franklin Paul and Lisa Shumaker

Our standards: The Thomson Reuters Trust Principles.

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