Thu. Sep 29th, 2022

Global Energy Market Trend

The US-China Energy Industry Forum focuses on promoting US-China energy trade. Energy, especially crude oil, natural gas, and petrochemical products are global commodities. Energy security means not only sufficient supply but also at an affordable price. For example, crude oil market is a mature market, but oil price is not simply defined by demand vs supply. It is not an ideal market because OPEC had recently expanded to OPEC+ controlled a major portion of the supply side. Long shipping lines and pipelines are easily subjected to the influences of geopolitics. US is a new net exporter of energy and China has been the largest net energy importer, but US and China are engaged in trade wars. US will have the largest LNG export capacity in the world by the end of 2022. China is already the number one LNG importer. But LNG from the US has a global market and China produces natural gas domestically as well as imports natural gas via pipelines and LNG from different countries. Further, global prices for crude oil and natural gas are influenced heavily by global commodity traders. Many of them are not producers or end users of oil and gas, they are investors. Their perceptions on geopolitics and global economy impact the future commodity prices more than the producers or consumers. However, hedging in the commodity market provides certain market stability.

Fossil energies are expected to be phased out in mid-century for limiting greenhouse gas emissions. It is an expected commitment, but each nation has a different target and implementation plan so the transition to a fossil energy free world will not be even. Fossil energies’ future and market prices will have yet to be played out.

Transition to new and renewable energy has already started. Solar and wind energy technology and equipment are mature. But trade disputes persist affecting global deployment. EV’s global market is expanding fast and getting competitive. Global tension focuses on supply and processing of raw materials. It will increase the burden of consumers and delay the deployment of new technologies.

Carbon management products, including CO2 credit trading, CCUS, small nuclear reactors for co-generation will enjoy increasing global markets.