With global tensions at an all-time high, the oil market has seen volatility we have not seen since the 2008 economic crisis

U.S.-led sanctions on Russia exempted the energy sector, but traders are shying away from trading Russian barrels, leading to big discounts on that oil and tightening supply for other kinds of crude. Across various markets, different grades of oil in the Middle East and elsewhere surged OPEC plus is bringing the Gulf producers back in the spotlight. Will we see demand destruction? In this quarter's MENA newsletter, we answer some of these. Will the re-emergence of coal de-rail net-zero carbon ambitions? Find out more on the latest developments and their effects on the global energy market here.

Jeremy Anderson
Head of Dubai Office

Rystad Oil Price Estimates Q1: $100.4/bbl Brent | $95.9/bbl WTI | $93.0/bbl Dubai price

Russia's war in Ukraine could wipe out 1 million bpd of regional oil demand, impacting global balances

War in Ukraine could result in as much as 1 million barrels per day (bpd) of oil demand being removed from the global market, Rystad Energy research shows.
The human and material costs of the conflict have been catastrophic just seven days into the military operation. Russia has so far shown no signs of backing down, and prospects of a breakthrough in negotiations appear slim. As a result, investors and markets are scrambling to assess the ramifications of the worsening crisis as the West slaps even more stringent sanctions on Russia, while institutions and companies distance themselves from Moscow.

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Powering up: Global battery demand to surge by 2030, supply headaches on the horizon

As the energy transition quickens and countries and consumers strive to decarbonize, global battery demand could surge exponentially and approach nine terawatt-hours (TWh) annually by 2030, 15 times the levels seen in 2021.
Rystad Energy research shows that although global battery demand in 2021 stood at 580 gigawatt-hours (GWh), more than double 2020’s total, global supply was still able to keep up. However, that is set to change in the coming years as the appetite for battery technologies in passenger vehicles and stationary storage grows significantly, straining the supply chain.

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Old King Coal: price reaches highest level in more than 200 years, on track for $500

Coal prices are soaring, hitting $462 per tonne today, up from $186 on the 23rd of February and likely to pass $500 this year, Rystad Energy research suggests.
While most of Europe and the wider world have focused on how Russia’s war in Ukraine has impacted oil, gas and, more recently, nickel prices, relatively little has been written about the coal price shock that is likely to hit the region and spread like a tsunami around the world.
Russia is Europe’s largest supplier of thermal coal. According to Eurostat, last year, Russia supplied EU member states with 36 million tonnes of thermal coal, representing 70% of total thermal coal imports. While volumes have stayed about the same, a decade ago, Russian coal imports were just half that at 35%.

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Gas output from Sub-Saharan Africa set to double by 2030, driven by deepwater developments

Untapped natural gas supplies in Sub-Saharan Africa are set to be unleashed this decade, with output more than doubling from 1.3 million barrels of oil equivalent per day (boepd) in 2021 to 2.7 million boepd in 2030 due to vast undeveloped deepwater resources, Rystad Energy research shows.
While deepwater developments have played a crucial role in the region’s liquids output to date, averaging about 50% of annual production, gas output from such fields has been minimal. That is expected to change, however, as gas from deepwater reserves will surge in the coming years. Production from deepwater developments will skyrocket from 120,000 boepd in 2021, 9% of total output including shelf and land production, to 1 million boepd accounting for 38% of total output.

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Rystad Energy Commentary: Is the Middle East destined to be the last one standing in the oil market?

The Middle East is set to account for half of oil supply additions by 2025 and will play a crucial role in the upstream industry’s recovery from the global demand slump caused by the Covid-19 pandemic. The region is well placed to gain oil market share as key producers have invested billions of dollars in expanding capacity with several projects in the development pipeline. Recent oil price strength lends support to project approvals in the region and will bring forward value from new oil production. Although Middle Eastern states are pursuing economic diversification strategies, the region’s national oil companies will continue to focus on deriving maximum value from the core hydrocarbons industry, with the region set to play a key role in ensuring security of global oil supply in the near future. In this commentary, Rystad Energy examines the key supply growth drivers and how producing states in the Middle East are balancing their diversification strategies with continued exploitation of the region’s vast oil and gas reserves.

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Rystad Energy Commentary: Middle East drilling activities surge set to boost well services investments

The Middle East is expected to see a notable rise in drilling activity as the region’s staple oil and gas industry looks to recover from the devastating effects wrought on global demand by the Covid-19 pandemic. The region is on track to see close to 3,700 new wells drilled this year, effectively achieving pre-pandemic levels of drilling and production, with OPEC stalwarts such as Saudi Arabia, Kuwait and the UAE leading the charge. In this commentary, we take a closer look at the drilling outlook for the Middle East and its impact on the oilfield services (OFS) market. 

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