Houston’s showpiece energy conference is usually an opportunity for backslapping and glad-handing. But this year executives are nervously watching the impact of the Iran war and the lack of any clear path toward a resolution.
Despite elevated oil and natural gas prices juicing stock prices, uncertainty about the resumption of supplies through the Strait of Hormuz hung heavily over the first day of CERAWeek by S&P Global, an annual fixture that attracts the biggest names in the industry.
The near-closure of the strait since the start of the conflict has curtailed more than 10 million barrels a day of oil production and about 20% of liquefied natural gas supply. The effects continue to ripple out across markets for fuel, chemicals and fertilizers.
“We’ve never been in such a crisis, which has so many repercussions long term,” said Marcel van Poecke, chairman of energy at private equity giant Carlyle Group Inc.
Oil trading at close to $100 a barrel during CERAWeek would normally foster a sense of bravado among many of the thousands of attendees.
But so far at this year’s event there’s been a nervousness in the air, not least because the direction of oil and gas prices seems increasingly dependent on the next headline from the White House.
That dynamic was on full display Monday as Brent crude plunged 11% after President Donald Trump dialed back his weekend threat to attack Iranian energy infrastructure. In private, some executives in Houston acknowledged the policy-by-social-media-post approach has created a volatile operating environment.
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In stark contrast to the futures market, physical cargoes are in some cases fetching premiums of more than $50 a barrel. Chevron Chief Executive Officer Mike Wirth said the paper market hasn’t yet priced in the full impact of the disruption, and made the comparison with the energy crisis triggered by the invasion of Ukraine in 2022, when supplies were diverted but not significantly disrupted.
“There really is a difference in terms of physical supply at this time versus what we’ve seen in prior incidents,” he said.
Oil futures “seem to be saying still that we’ll get through this somehow and everything will resume,” concurred Paul Sankey, an analyst at Sankey Research and adviser to consultant Oliver Wyman. “We don’t really know whether the paper market is truly reflecting the scale of the physical disaster here.”
It fell largely to US Energy Secretary Chris Wright to downplay the market impact of the war. Taking the stage Monday morning amid whoops and applause, he said energy prices aren’t yet high enough to hurt demand, but also that they will still stimulate more production. “Markets do what markets do,” Wright said.
On Sunday evening, Wright and Interior Secretary Doug Burgum met with US energy executives over dinner, according to people familiar with the matter, who asked not to be identified describing a private gathering.
While much of the meeting focused on routine domestic matters such as permitting, there was also discussion of the Iran war and the consequences of extensive damage to energy assets in the Middle East, the people said.
Last week’s attack by Israel on an Iranian gas field, Tehran’s retaliatory strikes that severely damaged gas infrastructure in Qatar and the resulting surge in international energy prices, was a warning of what further escalation in the region might mean for energy markets.
Yet as the first day of the conference drew to a close, there was no clarity on how the US and Iran might find a way to de-escalate.
“We’re in a tough spot, ladies and gentlemen,” said retired general and former US Defense Secretary Jim Mattis. “I can’t identify a lot of good options.”
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