The "Moment of Truth" for Oil

I love a good fight.

If you’re a sucker for the classics, I’d wager some of the more iconic bouts will spring to mind. 

Perhaps it was the battle between Frazier and Ali in ‘71, or maybe the second matchup between the two when the Thrilla in Manila took place four years later. Maybe it was Rumble in the Jungle when Ali took down Foreman in the DRC. 

For my readers around my age, that first image might possibly have been in ‘88, when Tyson decimated Michael Spinks in a minute and a half.  

But I can tell you one heavyweight war this year that you probably haven’t heard of. 

Birol versus Al Ghais.

Not ringing a bell?

Well, don’t beat yourself up too much, because there aren’t many people that would recognize those two names. Yet the war between these two men have been raging all year, with neither side willing to throw in the towel. 

And I promise you the outcome of this matchup will affect your daily life far more than anything else.

Vitriol in Vienna: The Moment of Truth

We’ve been witness to the ongoing spat between the International Energy Agency (IEA) and OPEC. 

The two have been at each other’s throats for a long time, but this shouldn’t be too surprising. After all, the IEA’s Net Zero Roadmap laid out a pretty bleak future for OPEC. Not only did their latest report to reach Net Zero Emissions (NZE) reaffirm that the world cannot develop any new oil, gas, or coal resources beyond existing fields and projects, but some of the current fields and infrastructure would need to close early. 

Dr. Fatih Birol, the IEA’s executive director, was even on the attack in recent months, suggesting that fossil fuel demand would peak by the end of the decade. 

“How?” you ask?

Well, the IEA has stated that it’ll come down to the proliferation of EVs, buffered by the fact that there’ll be 10x more electric vehicles on the road by 2030. And half of the cars sold in the U.S. will be electric. 

Of course, also helping matters will be an incredibly aggressive transition — coal and natural gas accounted for nearly 70% of global electricity generation in 2022 — to solar power that will generate more electricity at the end of the decade than what the U.S. produces today. 

If that turns out to be true, it’s a nail in OPEC’s coffin in seven short years. 

So you can understand why OPEC’s Secretary General, Haitham Al Ghasis, was a bit perturbed by the IEA’s ominous outlook for the world’s biggest oil producers. 

Yesterday, Al Ghasis’ scathing reply addressed this “moment of truth” for the oil and gas industry. 

For him, it was nothing more than vilifying the industry and taking an extremely narrow perspective of the challenges the world faces over energy security, energy access, and energy affordability.

But here’s the thing…

Poking the bear and pressuring OPEC to heel, especially when crude prices are weak, isn’t the smartest tactic… not right now, at least. 

In two days, OPEC is set to meet in Vienna once again to plot a path forward, which includes a decision on what to do regarding output. 

It should be clear by now that OPEC and Russia will keep their voluntary cuts in place through the first quarter of 2024. The Saudis are already leaving a million barrels per day off the table voluntarily. 

The real question is whether deeper cuts are ahead. 

If the Saudis can get the rest of OPEC to follow suit, we’re going to see a rally in crude prices much sooner than expected. 

Until next time,

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

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