Oil and Gas Volatility Is Short Term – The Oil Majors Fleeing The Market Will Change The World

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Posted on August 15, 2021

The US oil price fell more than six percent on Monday, a day after Saudi Arabia and the UAE reaching an agreement to increase output.  With surging Covid cases threatening economic recovery, stock markets slumped.

All of the oil majors have been impacted by the demands of investors to return profits to all shareholders. BP lost some investors last year after their announcement of the plan to cut its hydrocarbon production by 40%, coupled with a 10x increase in low-carbon investments by 2030.

On June 22, BP CEO sees higher oil prices to fund the energy transition plans. “It took a while for our investors to get their heads around what it is that we are trying to do, understandably,” Looney said. “I feel growing confidence amongst our shareholders in the strategy, and I feel much better about that aspect today than probably I would have done six months ago.”

The other oil majors, ExxonMobil, Chevron, and Shell have released their plans to follow in different levels and commitments. Total even took it further to re-brand to TotalEnergies.

The oil futures on 7-21-2021 we looking like a small rebound was in store for the day.

King Operating -Oil Futures

Yesterday on 7-21-2021 Bloomberg released a story about BHP looking to divest all of its oil & gas assets.

BHP Group is considering getting out of oil and gas in a multibillion-dollar exit that would accelerate its retreat from fossil fuels, according to people familiar with the matter.

The world’s biggest miner is reviewing its petroleum business and considering options including a trade sale, said the people, who asked not to be identified as the talks are private. The business, which is forecast to earn more than $2 billion this year, could be worth an estimated $15 billion or more, one of the people said.

The move comes as oil supermajors grapple with how to respond to investor pressure over climate, in some cases by shrinking their core production and adding renewable energy assets.

THE BOTTOM LINE

  • There will be fewer companies in the E&P space.
  • Countries with government-owned oil companies will pick up the slack.
  • The U.S. oil and gas production will ramp up but will take years to get back to energy independence.
  • Oil prices will be dictated by countries that need the prices of oil to be over $120 bpd.
  • U.S. natural gas will continue to fill world demand and exports will hang tough.

The oil producers in the United States are more critical now than almost any other time in history. The market volatility will pass to long-term very high oil and gas prices. As I wrote in an earlier article, the oil and gas market pricing has changed to include much wider and long-term impacts unlike any in the last 60 years. The migration of oil whales will be permanent and devastating, and oil prices will go up.

I would like to hear from you about your thoughts on the current market. Please reach out to me at the King Operating offices for a discussion on market information and what our research team sees on the investment horizon.

Look forward to talking with you soon.

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