What’s going on?
The world’s energy organizations engaged in some tough talking, with oil’s future taking the heat.
What does this mean?
Oil’s price has been pulled from side to side lately: a supply cut from OPEC – the group of oil-producing nations – fed speculation of heady prices, while the threat of a recession-fueled drop in demand did the opposite. And the International Energy Agency (IEA) poured more of the slippery stuff onto the flames, asserting that demand for oil is about to peak before falling off. But while the IEA would celebrate a shift toward renewable energy instead of fossil fuels, OPEC – representing economies that fully rely on oil – isn’t quite on board.
Why should I care?
For markets: A slippery trade.
Oil investors will be used to this to-ing and fro-ing – and if they’re not, they should be. The elixir’s famously volatile, and swinging highs and lows are nothing new. Most of the time, the price rallies just when everyone expects the opposite, and vice versa. Case in point: oil oracles were predicting $100-a-barrel price tags a few days ago, just before prices plunged. So if you’re in it for the long haul, make sure you’ve got steady nerves.
The bigger picture: It ain’t easy being green.
That tumultuous trend makes it hard to predict oil’s future, both short and long-term. Even the industry’s onlookers are torn. Some believe the electric vehicle transition has already signaled the beginning of the end, given that transport makes up the majority of oil demand. But others reckon savvy oil companies could keep supply tight in an effort to pull up prices and make as much money as possible while they can, maintaining dominance over the market until the greater energy transition comes along.
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