Oil Prices Head for Third Straight Monthly Drop as Crude Crisis Fears Ease

Three months ago, International Energy Agency chief Fatih Birol cautioned that a US conflict with Iran could trigger an oil-price shock surpassing the upheavals of the 1970s.

The warning rattled forecasters, prompting sharp downgrades to growth expectations and predictions of a fresh inflationary surge that would squeeze living standards and push interest rates higher.

But the IEA’s fears have not materialised. Oil and natural gas markets have certainly been choppy, often reacting whenever Donald Trump makes a statement.

Yet rather than climbing, Brent crude and West Texas Intermediate are on course for a third consecutive monthly fall, marking their steepest slide since the early stages of the Covid crisis in 2020.

Far from reaching the forecast $200-a-barrel mark, Brent crude is trading at about $73 a barrel — roughly back where it stood before the conflict began.

Labour figures continue to argue that Britain is gripped by a cost-of-living crisis, though the pressure now appears more theoretical than immediate.

Where energy costs remain high, the impact is being linked to Net Zero policies. Meanwhile, the latest signals from farmers and food producers suggest prices for British-grown groceries, particularly fresh produce, are starting to soften.

The great sages at the IEA and the International Monetary Fund were in an apoplectic mood in April. But the global energy supply has changed dramatically.

The world went into the Iran war with a major surplus. Fracking turned the US from a Jimmy Carter-era supplicant and big importer into the world’s largest producer. Argentina became an oil exporter. The temporary lifting of sanctions on Russia has contributed to supplies.

Elsewhere, the IEA, the United States and, most importantly, China have turned on the taps at their strategic reserves.

At the beginning of the conflict, China sat on 82 days’ worth of supply. Demand is fierce with the People’s Republic burning through 17m barrels a day.

Even so, it is estimated, as peace tries to break out, that it has enough in store for another 11 weeks of conflict.

There have been bottlenecks in the developing world. The US, however, goes into its summer ‘driving season’ reasonably stocked. 

Britain’s ‘just-in-time’ supplies of oil and liquefied natural gas make us more vulnerable to interruption of supply and higher prices than competitors. Nevertheless, Norway, a major UK supplier, has kept pumping.

Britain would be less vulnerable if the Rosebank and Jackdaw North Sea oilfields were opened, and storage at Rough, off the coast of Yorkshire, were restored.

By backing storage, Andy Burnham could future-proof supplies and re-industrialise Yorkshire. It should be simple for a Prime Minister willing to defy Ed Miliband’s net-zero fanaticism. Bring it on.

Spinning door

Energy price gyrations have been good for BP’s trading division but not impressive enough to save the skin of the group’s deputy chief executive Carol Howle.

She will be leaving later this year, having stepped up as interim chief executive as BP awaited the arrival of new boss Meg O’Neill. 

Since arriving, O’Neill has seen the shock departure of chairman Alfred Manifold after alleged ‘serious concerns’ about misconduct.

O’Neill plainly is determined to stamp her authority on the group. Kerry Dryburgh, vice-president in charge of people and culture – not an unalloyed triumph – is also departing. She is to be replaced by O’Neill’s chief of staff, Sonya Adams.

Manifold saw his role as shaking up a complacent executive team. O’Neill is pushing on with the change. 

Howle hardly endeared herself to governance mavens after the FT reported she sold £2million of shares shortly before Manifold’s exit. O’Neill is showing inner toughness learned at Australia’s Woodside and Exxon.

Billions gated

Bill Gates’ Congressional testimony regarding his association with sex offender Jeffrey Epstein is in danger of costing the Gates Foundation’s work on African disease dearly. 

The recently retired Oracle of Omaha, Warren Buffett, 95, has forgone a mid-year multi-million-dollar donation pending a review by the foundation of the Epstein-Gates relationship.

Over the last two decades, Buffett gifted $47billion to Gates’ causes. It’s not just Gates’ reputation that is suffering.