Oil’s 2019 milestones tell decade’s story of energy abundance

Bloomberg

Global oil markets notched up a number of milestones this year that echoed the story of the past decade: the world has shifted from an era of supply tightness to plenty.
What distinguished the developments of 2019 was not just how big they were but often how little impact they had. From the world’s biggest-ever initial public offering to its worst-ever supply disruption, a barrage of sanctions on exporters to two OPEC interventions, never before had so many momentous events left investors so unmoved.
At the heart of that indifference was the force that has transformed world energy balances over the past 10 years: the American revolution in shale oil and gas, which is cushioning global markets against shocks that would once have sent prices rocketing. This too achieved a landmark in 2019, turning the US into an net exporter of crude and refined oil.
And there was another turning point showing the years ahead may also be marked by supply abundance. For the first time, the world’s leading energy institution predicted that demand for oil — once expected to keep growing almost indefinitely — will stall at the turn of the next decade.
“This year is probably the first in my recollection where oil prices so extremely decoupled from geopolitical risk,” said Amy Myers Jaffe, senior energy and environment fellow at the Council on Foreign Relations in New York. “It was also the year when analysts and car companies started to talk about the possibility of peak car and peak demand with increasing probability.”
The biggest headlines of 2019 came out of the world’s largest oil exporter, Saudi Arabia. Riyadh finally floated part of state oil giant Saudi Aramco after a labourious three-year process, securing a valuation of $2 trillion that made it the world’s biggest company.
Yet the 1.5% stake sold was just a portion of the original plan, and mostly marketed to local buyers instead of the foreign investors once courted, as fund managers balked at the lofty asking price.
A far more traumatic ordeal rocked Saudi Arabia in September, when a swarm of missiles and armed drones blasted its Abqaiq processing facility and briefly disabled half the kingdom’s output capacity. Yemen’s Houthi rebel group claimed responsibility.