US energy and interior secretaries met executives amid market turmoil
Energy executives gathered in Houston on Sunday to discuss everything from increasing domestic oil production to Venezuelan opportunities. This was during the worst global supply disruption due to the U.S. and Israeli war against Iran. The meeting was held over dinner on the eve of the CERAWeek energy conference where oil ministers, executives of major companies and members of the Organization of the Petroleum Exporting Countries gather to discuss the current state of the industry.
Oil prices are at multi-year highs of $100 per barrel, after Iran effectively closed down the Strait of Hormuz. This is the main trade route that accounts for 20% of all oil and gas in the world.
The attacks on the energy infrastructure have left a long-term impact. Even if the Strait is reopened, it may be many years before the supply levels return to the pre-war level.
We discussed the oil and gas market and speculation was made about how long it could take to close the Strait. No one could agree on the length of time this would last. Everyone realizes that this is the most disrupting and unusual time ever in energy markets. Bob Dudley is the former CEO of BP and Chairman of the Oil and Gas Climate Initiative.
Dudley stated that the two U.S. officials "basically tried to make their case": "'This is why you need our support, and these and these and this, from Venezuela to Iran'." "But the U.S. has no doubt that it will do what is necessary to open the straits with or without European help."
Secretary Wright told reporters that energy was discussed but refused to elaborate. An official in the administration who refused to make a public comment said that the possibility of increasing U.S. oil output was also discussed.
The Sunday dinner at The Grove in downtown Houston is a conference tradition. It brings together the top leaders of the oil industry. In the past, this has included OPEC energy ministers and shale executives.
The gathering this year was not limited to leaders in the oil industry. It included executives from coal and power, underlining the "growing importance" of power generation, as data center demand explodes.
Toby Neugebauer was one of the attendees, as well as Ernie Thrasher CEO of Xcoal and Lorenzo Simonelli CEO of oilfield service firm Baker Hughes. Even after Donald Trump said on Friday that he was considering winding down the operations, there are no signs that the 'war against Iran' will be ending any time soon. Trump said on Saturday that the U.S. will attack Iranian power stations if the strait does not open within 48 hours.
Iran has said that it will respond to such an action by attacking Gulf energy systems and water treatment facilities. U.S. gas prices are approaching $4 per gallon and have increased by nearly 30% since the beginning of the war at the end of February. This could pose a problem for Trump in the run-up to the November midterm elections. Diesel prices are now over $5 per gallon.
After the dinner, Thrasher of Xcoal said: "I believe there is a 'great effort' being made to minimize the destruction to 'the infrastructure. But no one knows the final result."
"My biggest takeaway is that we are in a volatile time. There is uncertainty and a lot to deal with, but I am confident there is a way through these challenges. But there is no easy fix." Reporting by Arathy S. Somasekhar and Nathan Crooks in Houston; Writing by Liz Hampton, Editing by Sonali P.
(source: Reuters)
