RT.com
17 Nov 2023, 04:14 GMT+10
The potential spread of the Israel-Hamas conflict threatens global oil supplies, the CEO of the energy services firm has said
Growing global uncertainty amid the conflicts in Ukraine and the Middle East could have a negative impact on the world's oil and LNG supply, Lorenzo Simonelli, chief executive of Baker Hughes, told the Financial Times this week.
According to Simonelli, the rising instability could have similar economic consequences as the 'Oil Shock' crisis of 1973-74. During that period, the world saw skyrocketing energy prices and fuel shortages after Arab oil-producing nations imposed an embargo in response to Washington's support for Israel in the Yom Kippur War. The price of a barrel of oil nearly quadrupled in less than a year, adding to the factors that caused a decade of high inflation and stagflation in the US during the 1970s.
"From a historical context I've heard people say, you go back to the oil embargo of 1973 - that being somewhat similar," Simonelli said. "But in my tenure, no [the geopolitical climate has not been this fragile - FT]. This is, from a political standpoint, very fluid."
The Baker Hughes CEO pointed out that the Israel-Hamas conflict had not "changed the outlook" for oil supply or demand as Israel is not a significant producer of crude. However, according to experts cited by the FT, a major intervention by Iran could drive up prices. "Base case is that this is hopefully contained within the situation that it is currently - sad as it is - and things continue to be tight. But clearly, if there's a worsening and deterioration and an escalation of the situation, things will change," Simonelli argued.
Baker Hughes is a leading supplier of liquified natural gas equipment, and Simonelli highlighted that the company had a large number of LNG contracts. He claimed that Russian pipeline gas had little prospect of re-emerging in the short term as a competitor to LNG, even if the conflict in Ukraine ends. "I think Europe has been shown the difficulties of being so dependent on one energy source," he said.
According to Simonelli, a warm winter last year and efforts by the EU to build up stocks have helped to avoid a reoccurrence of the 2021 energy crisis, when gas prices in the region spiked over €300 ($320) per megawatt hour amid the bloc's decision to shift away from Russian supplies.
"There is a slight sigh of relief right now, because it seems still like a relatively mild winter at this moment. But if there's a serious winter, it's still going to have an impact on Europe," said the CEO.
Simonelli noted that the buildup of LNG projects on the US Gulf Coast would continue as American exporters look to meet booming demand from the EU.
For more stories on economy & finance visit RT's business section
(RT.com)
Get a daily dose of Milwaukee Sun news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Milwaukee Sun.
More InformationBOLOGNA, Italy: Due to fears of a collapse, local officials have secured the area around one of two 12th century ...
MUNICH, Germany: The heavy snow and icy conditions that hit Bavaria, Germany, canceled flights and long-distance trains out of Munich, ...
RALEIGH, North Carolina: After a decade of discussions and hesitations, North Carolina has expanded Medicaid coverage by offering government-funded health ...
The U.S. has supplied Israel with scores of BLU-109 bunker-buster bombs since October 7, the Wall Street Journal has reported, ...
WASHINGTON D.C.: This week, the Biden administration announced a proposal by the Environmental Protection Agency (EPA) that would require U.S. ...
TOKYO, Japan: Japan's space agency recently fell victim to a cyberattack, but reassuringly, the compromised information did not pertain to ...
CHICAGO, Illinois: As winter sets in and with cold weather just around the corner, Chicago is struggling to house hundreds ...
ARLINGTON, Virginia: This week, the conservative U.S. political network Americans for Prosperity Action (AFP Action), led by billionaire Charles Koch, ...
(Photo credit: Kevin Jairaj-USA TODAY Sports) Dallas Cowboys coach Mike McCarthy will undergo surgery on Wednesday after being diagnosed with ...
(Photo credit: Michael McLoone-USA TODAY Sports) Catcher Victor Caratini agreed to a two-year, $12 million contract with the Houston Astros, ...
(Photo credit: Jeff Hanisch-USA TODAY Sports) Mason Crosby is set to join the Los Angeles Rams after 16 seasons with ...
(Photo credit: Brad Penner-USA TODAY Sports) Cam Spencer scored 23 points and No. 5 UConn used some hot shooting to ...