An uneasy mix of celebration and anxiety dominates the ‘Davos of energy’ as the month-long Iran war further disrupts the global economy |
An uneasy mix of celebration and anxiety dominates the ‘Davos of energy’ as the month-long Iran war further disrupts the global economy
Festive music from the band Sweet Crude blared at a party minutes after President Donald Trump’s former defense secretary warned that ending the war now would cede ownership of the narrow Strait of Hormuz—the world’s most critical choke point—to Iran.
“We’re in a tough spot, ladies and gentlemen,” said retired Gen. Jim Mattis at the CERAWeek by S&P Global conference in Houston. “I can’t identify a lot of options.”
The dichotomy of the celebratory, yet nerve-wracking vibes dominated the unofficial “Davos of energy” event this week that still attracted a record of over 11,000 attendees from 90 countries—a veritable who’s who of the energy sector around the world—not counting the fossil fuel protestors outside.
The mood was meant to be triumphant. There’s ongoing crude oil and gas growth, but most prominent is the unprecedented wave of electricity demand from AI, triggering an infrastructure boom for pipelines, export hubs, and power, including gas-fired generation, renewables, nuclear, and more—truly an all-of-the-above energy renaissance that could still suffer from geopolitical turmoil.
So, the extension of the unexpected Iran war overshadows everything. The industry still cannot come to grips with the previously unfathomable scenario of the strait staying shuttered for a prolonged period of time. The Strait of Hormuz is the narrow, precarious waterway between Iran and the Musandam Peninsula through which flows roughly 20% of the world’s oil and natural gas, fertilizer for agriculture, helium for semiconductors, and petrochemicals that go into almost everything. Much of the world, especially in developing Asia, is already suffering the consequences and the ripple effects will continue to spread the longer the war draws out.
“There’s a lot of somber talk,” said Arjun Murti, energy macro and policy partner at the Veriten research and investment firm.........