The global energy market is facing profound changes

Reporter: Weng Donghui

The current international oil prices are both ups and downs, and positive and negative factors are intertwined.

A recent piece of news is eye-catching and has also caused considerable controversy.

One stone stirred up a thousand waves.

Many people appreciate the efforts of the International Energy Agency to promote international cooperation in green energy and urge governments to accelerate the transition.

How should we view the current international energy market pattern and future trends? "The scenery is long and you should keep your eyes open.

Let me talk about demand first.

The so-called peak usually refers to the point in time when global oil demand enters an irreversible decline.

Facing a low-carbon future, major oil-producing countries plan ahead and plan for transformation.

　　Gulf oil-producing countries have set their sights on green hydrogen energy.

　　According to statistics, new renewable energy power generation in 2020 has increased by more than 45% over 2019, setting a new record.

　　For this reason, some people call 2020 a watershed in the fossil fuel industry.

　　Look at the supply again.

　　In the next few years, the supply capacity of fossil fuels such as oil, gas and coal will face serious difficulties.

　　For example, Goldman Sachs, as the largest fossil fuel financier, decided to stop funding for oil exploration and drilling and new thermal coal mines in the Arctic two years ago.

　　Another example is the announcement of Blackstone, the world's largest asset management company, to increase its investment in environmental, social and governance (ESG) from US$90 billion to US$1 trillion within 10 years.

　　In addition, statistics as of May this year show that there are at least US$203 billion in bonds and loans worldwide for renewable energy projects, and investment by companies focused on hydrocarbons amounted to US$189 billion.

　　Bloomberg data shows that as of 2015, banks have invested more than 3.
6 trillion US dollars in fossil fuels, which is almost three times the total amount of bonds and loans used for green projects.
The situation has begun to reverse in just a few years.
For example, New York State’s $226 billion pension fund recently announced plans to withdraw funds from the oil and gas sector in the next few years.
According to statistics from PricewaterhouseCoopers, 77% of institutional investors have almost stopped buying financial products that are unsustainable or environmentally unfriendly to some extent in the past year.

　　In 2020, investment in new oil and gas projects fell to the lowest point in 15 years, at $350 billion.
It is precisely because of the lack of sufficient investment that the newly discovered and exploited oil and gas fields are far behind consumption.
According to research conducted by the Norwegian Energy Consulting Company, the proven oil and natural gas reserves owned by giants including ExxonMobil, BP, Shell, Chevron and Total have all experienced rapid declines in varying degrees.

　　Nevertheless, the market is not worried about short-term oil supply.
Several of the world's largest oil producers are preparing to increase their production capacity.
The reason is simple: oil demand is imminent, and countries are determined to do their best to make the best use of oil resources.

　　The "OPEC+" in the next few months will further increase the production limit, thereby increasing the supply.
Russia plans to increase its daily output to 11.
1 million barrels by 2029.
Its crude oil output can last until at least 2080, and its natural gas reserves can last for 103 years.
Saudi Arabia will gradually relax its unilateral reduction of 1 million barrels per day in the next few months, starting from an increase in monthly output of 250,000 barrels per day in May and June.
Overall, "OPEC+" is expected to return to the market in July, adding 2.
1 million barrels per day.
OPEC predicts that this year's total oil supply from non-OPEC countries will increase by 700,000 barrels per day compared to the same period last year.

　　It is reported that hedge funds and other institutional buyers believe that the strong economic recovery in the United States and China will play a leading role, and the reopening of travel by major economies will increase fuel demand, and crude oil prices may continue to rise.
For this reason, oil futures and options contracts are popular.

　　In today's world, oil is still the blood of industry, and fossil fuels will still play a key role for a long time.
But climate change is a big problem, and its catastrophic consequences are not unattainable.
Studies have shown that sea level rise, wildfires, heat waves and extreme weather events have raged everywhere, and may cause infrastructure collapse, crop yields, and even endanger human health in the next five years.
From this perspective, accelerating the energy transition, vigorously developing a green economy, and realizing a comprehensive carbon neutral goal as soon as possible are the common responsibilities of the entire human society.