Connect with us

Economy

Key energy agencies diverge as demand and oil prices climb

Published

3 years ago

6 minute read

DUBAI, United Arab Emirates (AP) — Leaders of the world’s most consequential energy bodies gathered for a forum Wednesday to discuss the uncertain future of oil as demand rebounds and prices climb, all while a growing roster of nations pledge to transition to cleaner forms of energy.

The forum, which included speakers from the Organization of Petroleum Exporting Countries, the International Energy Agency and the International Energy Forum, presented varying forecasts for oil demand and discussed energy security and market stability.

Yet from the outset, the wider debate on how the world should best transition away from so-called dirty fuels and other sources of carbon emissions that pollute the air played out as speakers gave their remarks.

Major oil-producing nations, like Saudi Arabia and the United Arab Emirates, have long argued that a rapid energy transition away from the fossil fuels that they continue to rely on for revenue will impact global economic growth and hurt the world’s poorest. Those backing a fast-tracked transition insist new investments in energy must go toward expanding existing wind and solar solutions and in funding innovative solutions if the world is to avoid catastrophic global warming levels. On both sides, however, there is agreement that the world is far from reaching sustainable targets as demand for energy grows.

“We are not on track. So how should policy makers respond to this dilemma? The reality is that 80% of the world’s energy needs continue to be met by fossil fuels,” said Joseph McMonigle, secretary general of the Saudi-based International Energy Forum that hosted the symposium. The IEF is the largest organization of energy ministers, with 71 member states, including the United States.

McMonigle said global energy demand has “roared back” to pre-pandemic levels, but that investments in oil and gas are not back to where they were before the COVID-19 crisis.

“Disinvestment in energy supply will not deliver a just and orderly transition and cannot be a response to the climate crisis,” he said, arguing that countries should invest in both greener forms of energy as well as fossil fuels.

The IEF has called for oil and gas investment to reach $525 billion through 2030 to ensure “market balance” despite a slowdown projected in how much demand for oil will grow. The group notes that investment in the oil and gas sector in 2021 stood at $341 billion. Without more financing, the IEF says demand could outstrip future supply within the next five to six years. They say it could also result in switching to more polluting energy sources such as wood and coal.

Others disagree. The International Energy Agency’s executive director has said the world does not need more investments in new oil, gas and coal projects.

From Paris, the IEA’s Fatih Birol did not directly address the comments made by McMonigle, but he echoed the sentiment that the energy transition must happen in an “orderly manner” so that climate targets are met and oil producing economies are seen as part of the solution.

To meet these targets, the world must reduce its consumption of fossil fuels, Birol said, before later adding: “We cannot drop oil and gas tomorrow.”

“The world will need oil and gas for several years to come. However, if we want to reach our climate targets we would need less oil and less coal and less gas than we use today in an unabated format.”

The IEA says that for the world to reach net-zero emissions by 2050, annual clean energy investment worldwide will need to more than triple by 2030 to around $4 trillion. It has also called out the energy sector as the source of around 75% of greenhouse gas emissions, a main driver in climate change.

The IEA estimates that world oil demand is set to expand by 3.2 million barrels per day this year, reaching 100.6 million barrels per day as restrictions to contain the spread of the coronavirus ease. Benchmark crude prices rose by more than 15% in January to cross the $90 per barrel threshold for the first time in more than seven years.

The rebound in demand for oil, combined with a shortfall in energy investments, rising prices and market uncertainty has led to varying energy outlook scenarios. The diverging outlooks by OPEC, the IEF, IEA and others have an impact on how governments choose to formulate their energy policies and decide on production levels as they commit to net-zero pledges.

___

Follow Aya Batrawy on Twitter at www.twitter.com/ayaelb

___

Follow AP’s climate coverage at http://apnews.com/hub/climate

Aya Batrawy, The Associated Press

Related Topics:

Storytelling is in our DNA. We provide credible, compelling multimedia storytelling and services in English and French to help captivate your digital, broadcast and print audiences. As Canada’s national news agency for 100 years, we give Canadians an unbiased news source, driven by truth, accuracy and timeliness.

Follow Author

More from this author
COVID-19 / 1 year ago

Peckford: Hallelujah! Supreme Court of Canada to hear Newfoundland and Labrador charter case

COVID-19 / 1 year ago

Supreme Court will not hear case about government’s violation of rights and freedoms

Alberta / 1 year ago

Alberta looking to ban electronic vote tabulators ahead of next provincial election

Business

Canada Caves: Carney ditches digital services tax after criticism from Trump

Published on June 30, 2025

By

From The Center Square

By

Canada caved to President Donald Trump demands by pulling its digital services tax hours before it was to go into effect on Monday.

Trump said Friday that he was ending all trade talks with Canada over the digital services tax, which he called a direct attack on the U.S. and American tech firms. The DST required foreign and domestic businesses to pay taxes on some revenue earned from engaging with online users in Canada.

“Based on this egregious Tax, we are hereby terminating ALL discussions on Trade with Canada, effective immediately,” the president said. “We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period.”

By Sunday, Canada relented in an effort to resume trade talks with the U.S., it’s largest trading partner.

“To support those negotiations, the Minister of Finance and National Revenue, the Honourable François-Philippe Champagne, announced today that Canada would rescind the Digital Services Tax (DST) in anticipation of a mutually beneficial comprehensive trade arrangement with the United States,” according to a statement from Canada’s Department of Finance.

Canada’s Department of Finance said that Prime Minister Mark Carney and Trump agreed to resume negotiations, aiming to reach a deal by July 21.

U.S. Commerce Secretary Howard Lutnick said Monday that the digital services tax would hurt the U.S.

“Thank you Canada for removing your Digital Services Tax which was intended to stifle American innovation and would have been a deal breaker for any trade deal with America,” he wrote on X.

Earlier this month, the two nations seemed close to striking a deal.

Trump said he and Carney had different concepts for trade between the two neighboring countries during a meeting at the G7 Summit in Kananaskis, in the Canadian Rockies.

Asked what was holding up a trade deal between the two nations at that time, Trump said they had different concepts for what that would look like.

“It’s not so much holding up, I think we have different concepts, I have a tariff concept, Mark has a different concept, which is something that some people like, but we’re going to see if we can get to the bottom of it today.”

Shortly after taking office in January, Trump hit Canada and Mexico with 25% tariffs for allowing fentanyl and migrants to cross their borders into the U.S. Trump later applied those 25% tariffs only to goods that fall outside the free-trade agreement between the three nations, called the United States-Mexico-Canada Agreement.

Trump put a 10% tariff on non-USMCA compliant potash and energy products. A 50% tariff on aluminum and steel imports from all countries into the U.S. has been in effect since June 4. Trump also put a 25% tariff on all cars and trucks not built in the U.S.

Economists, businesses and some publicly traded companies have warned that tariffs could raise prices on a wide range of consumer products.

Trump has said he wants to use tariffs to restore manufacturing jobs lost to lower-wage countries in decades past, shift the tax burden away from U.S. families, and pay down the national debt.

A tariff is a tax on imported goods paid by the person or company that imports them. The importer can absorb the cost of the tariffs or try to pass the cost on to consumers through higher prices.

Trump’s tariffs give U.S.-produced goods a price advantage over imported goods, generating revenue for the federal government.

Continue Reading

Alberta

Canadian Oil Sands Production Expected to Reach All-time Highs this Year Despite Lower Oil Prices

Published on June 30, 2025

By

From Energy Now

S&P Global Commodity Insights has raised its 10-year production outlook for the Canadian oil sands. The latest forecast expects oil sands production to reach a record annual average production of 3.5 million b/d in 2025 (5% higher than 2024) and exceed 3.9 million b/d by 2030—half a million barrels per day higher than 2024. The 2030 projection is 100,000 barrels per day (or nearly 3%) higher than the previous outlook.

The new forecast, produced by the S&P Global Commodity Insights Oil Sands Dialogue, is the fourth consecutive upward revision to the annual outlook. Despite a lower oil price environment, the analysis attributes the increased projection to favorable economics, as producers continue to focus on maximizing existing assets through investments in optimization and efficiency.

Get the Latest Canadian Focused Energy News Delivered to You! It’s FREE: Quick Sign-Up Here

While large up-front, out-of-pocket expenditures over multiple years are required to bring online new oil sands projects, once completed, projects enjoy relatively low breakeven prices.

S&P Global Commodity Insights estimates that the 2025 half-cycle break-even for oil sands production ranged from US$18/b to US$45/b, on a WTI basis, with the overall average break-even being approximately US$27/b.*

“The increased trajectory for Canadian oil sands production growth amidst a period of oil price volatility reflects producers’ continued emphasis on optimization—and the favorable economics that underpin such operations,” said Kevin Birn, Chief Canadian Oil Analyst, S&P Global Commodity Insights. “More than 3.8 million barrels per day of existing installed capacity was brought online from 2001 and 2017. This large resource base provides ample room for producers to find debottlenecking opportunities, decrease downtime and increase throughput.”

The potential for additional upside exists given the nature of optimization projects, which often result from learning by doing or emerge organically, the analysis says.

“Many companies are likely to proceed with optimizations even in more challenging price environments because they often contribute to efficiency gains,” said Celina Hwang, Director, Crude Oil Markets, S&P Global Commodity Insights. “This dynamic adds to the resiliency of oil sands production and its ability to grow through periods of price volatility.”

The outlook continues to expect oil sands production to enter a plateau later this decade. However, this is also expected to occur at a higher level of production than previously estimated. The new forecast expects oil sands production to be 3.7 million b/d in 2035—100,000 b/d higher than the previous outlook.

Export capacity—already a concern in recent years—is a source of downside risk now that even more production growth is expected. Without further incremental pipeline capacity, export constraints have the potential to re-emerge as early as next year, the analysis says.

“While a lower price path in 2025 and the potential for pipeline export constraints are downside risks to this outlook, the oil sands have proven able to withstand extreme price volatility in the past,” said Hwang. “The low break-even costs for existing projects and producers’ ability to manage challenging situations in the past support the resilience of this outlook.”

* Half-cycle breakeven cost includes operating cost, the cost to purchase diluent (if needed), as well as an adjustment to enable a comparison to WTI—specifically, the cost of transport to Cushing, OK and quality differential between heavy and light oil.

About S&P Global Commodity Insights

At S&P Global Commodity Insights, our complete view of global energy and commodity markets enables our customers to make decisions with conviction and create long-term, sustainable value.

We’re a trusted connector that brings together thought leaders, market participants, governments, and regulators and we create solutions that lead to progress. Vital to navigating commodity markets, our coverage includes oil and gas, power, chemicals, metals, agriculture, shipping and energy transition. Platts® products and services, including leading benchmark price assessments in the physical commodity markets, are offered through S&P Global Commodity Insights. S&P Global Commodity Insights maintains clear structural and operational separation between its price assessment activities and the other activities carried out by S&P Global Commodity Insights and the other business divisions of S&P Global.

S&P Global Commodity Insights is a division of S&P Global (NYSE: SPGI). S&P Global is the world’s foremost provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help many of the world’s leading organizations navigate the economic landscape so they can plan for tomorrow, today. For more information visit https://www.spglobal.com/commodity-insights/en.

SOURCE S&P Global Commodity Insights

Continue Reading

Trending

X