S&P’s Dan Yergin warns of ‘dangerous time’ for global economy as Middle East tensions fester
The global economy is entering a “dangerous time” like never before as Middle East tensions remain elevated, said S&P Global’s vice chairman Daniel Yergin.
Since the Israel-Hamas conflict began on Oct. 7 of last year, the oil market has experienced minimal disruptions, with prices remaining under pressure as a result of increased U.S. production and weak demand from China. However, this sentiment has been shifting. Oil prices spiked last week on fears that Israel could target Iran’s oil industry in retaliation for Tehran’s ballistic missile attack, with industry analysts raising concerns about a genuine threat to supply.
“The Israelis have not concluded what they’re going to do in terms of a strike — that’s under discussion,” U.S. President Joe Biden told reporters at a White House press briefing last week, adding that he discouraged Israel from striking Iranian oil facilities.
Last week, both oil benchmarks saw their biggest weekly gain since March 2023. During Asia trading on Tuesday, global benchmark Brent slipped 1.77% to $79.50 a barrel, while U.S. West Texas Intermediate traded 1.83% lower at $75.77 per barrel.
Yergin told CNBC’s “Squawk Box Asia” that he expects Israeli retaliation will not just be a replay of last April, but something “much stronger.”
In April, Iran and Israel came to blows but ultimately avoided a full-scale war. Iran fired hundreds of ballistic missiles and drones at Israel in retaliation for an attack on an Iranian diplomatic facility in Syria.
When asked if the global economy is on the precipice of another supply shock resulting from Middle East tensions, Yergin said it’s a precarious time for markets.
“I think it’s a very dangerous time, one that we haven’t seen,” he said.
Additionally, while Yergin maintained that it is not certain whether Iranians have operational nuclear weapons, that is still “certainly in the backdrop,” particularly through the lens of the Israelis.
“The betting is that the Israelis would not attack, try to attack, the nuclear facilities at this time. But a few months from now, a few weeks from now, whatever it is, Iran would have the capacity — it’s thought — to deliver a nuclear weapon, and that raises the stakes,” he said, likening the moment to the 1962 Cuban Missile Crisis.
That said, Israel is a lot more concerned about Iran’s nuclear facilities than the Iranian oil industry, said Pavel Molchanov, managing director of investment services firm Raymond James. Iran’s nuclear program has progressed to a stage where, in approximately one week, the country could potentially enrich enough uranium for five fission weapons, according to estimates by Iran Watch, a website published by the Wisconsin Project on Nuclear Arms Control.
“The worst-case scenario would be something that Iran can do on its own, which is a blockade of the Strait of Hormuz. So this is not directly related to Israeli airstrikes or missiles.
The strait, between Oman and Iran, is a vital channel where about one fifth of global oil production flows daily, according to the U.S. Energy Information Administration. It is a strategically important waterway linking crude producers in the Middle East with key markets across the world.
The inability of oil to traverse through the strait, even temporarily, can increase shipping costs, lead to considerable supply delays and ratchet up global energy prices, with some surmising that a worst-case scenario could prompt oil prices to surge above $100 a barrel.
Saudi Aramco’s Ras Tanura oil refinery and oil terminal
Ahmed Jadallah | Reuters
Saudi state oil giant Aramco reported a 15.4% drop in net profit in the third-quarter on the back of “lower crude oil prices and weakening refining margins,” but maintained a 31.05 billion dividend.
The company reported net income of $27.56 billion in the July-September period, topping a company-provided estimate of $26.9 billion. The print is also a 5% drop from the previous quarter, which came in at $29.1 billion, as lower global oil prices, weaker demand and prolonged OPEC+ production cuts led by Saudi Arabia continue to impact crude prices.
The average selling price of oil for the second quarter of 2024 stood at $85 per barrel, but dropped to $78.7 per barrel during the third quarter, according to Saudi-based bank Al Rajhi capital, as non-OPEC supply volumes grew.
The oil firm said its year-on-year decline was partly offset by a “reduction in selling, administrative and general expenses primarily driven by a gain from derivative instruments, and a decrease in production royalties largely reflecting lower crude oil prices and a lower average effective royalty rate compared to the same quarter last year.”
Aramco’s dividend includes a base payout of $20.3 billion and an atypical performance-linked one of $10.8 billion. The Saudi government and the kingdom’s sovereign wealth vehicle, the Public Investment Fund, are the main beneficiaries of the dividend, holding stakes of roughly 81.5% and 16% in the company.
The remaining shareholding trades freely on Saudi Arabia’s Tadāwul stock exchange, with the company having finalized its second public share offering back in June.
Aramco’s earnings before Interest and Taxes (EBIT) came in at $51.45 billion in the third quarter, down 17% year-on-year. Aramco’s capital expenditure guidance was brought up 20% to $13.23 billion.
The company was trading at 27.45 riyals following the announcement, down 0.18% on the previous day.
The earnings align with a broader trend across oil majors, whose third-quarter profits have also suffered from declines in crude prices and refining margins. Aramco said it achieved average realized crude price of $79.3 per barrel in the third quarter, compared with $89.3 per barrel in the same period of last year.
Saudi Arabia, the world’s largest crude exporter who produces roughly 9 million barrels per day of crude at present, serves as the de facto leader of the OPEC+ oil producers’ alliance, a subset of whom agreed over the weekend to delay a planned December output hike by one month.
“Aramco delivered robust net income and generated strong free cash flow during the third quarter, despite a lower oil price environment,” CEO Amin Nasser said in a statement. “We also progressed our upstream developments, strengthened our downstream value chain, and advanced our new energies program as we continue to invest through cycles.”
The revenues will be a boon to the Saudi economy, which is currently undergoing a diversification process under Crown Prince Mohammed bin Salman’s legacy Vision 2030 scheme spanning a slew of high-cost infrastructure “gigaprojects.”
Earlier this year, Saudi Arabia’s Ministry of Finance cut the kingdom’s growth forecast to 0.8% in 2024, in a steep decline from a previous projection of 4.4%, and raised the outlook for the national budgetary shortfall to roughly 2.9% of GDP, from a prior indication of 1.9%.
On today’s episode of Quick Charge, Tesla’s Cybertruck is now available in Canada – and, like in the US, there’s no waiting! Plus, we’ve got an “actually” smart summon Tesla that’s actually stuck, GM reaches a sales milestone, and we get a brand-new title sponsor!
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![This 'supercharger on wheels' brings fast charging to you [update]](https://i0.wp.com/electrek.co/wp-content/uploads/sites/3/2024/05/EV-mobile-charging-with-Yoshi-Mobility-3.jpg?resize=1200,628&quality=82&strip=all&ssl=1)
Mobile car care company Yoshi Mobility launched a DC fast charging EV mobile unit that it likens to “a supercharger on wheels.”
November 4, 2024 update: Yoshi Mobility will only be charging EVs on the side of the road now – it announced today that it’s selling its fleet fueling operation to EZFill Holdings (Nasdaq: EZFL).
It was originally founded as a direct-to-consumer, mobile fueling business in 2016, but now it’s going to focus on mobile EV charging, virtual vehicle inspections for partners like Uber and Turo, and onsite preventative maintenance.
Bryan Frist, Yoshi Mobility’s CEO & cofounder, said, “By spinning off our fuel business and focusing all of our energy on solving hair-on-fire problems that fleet owners face, we are meeting the changing needs of enterprise customers while making the future of transportation safer, cleaner, and more sustainable.”
May 22, 2024: Yoshi Mobility saw that its existing customers needed mobile EV charging in places where infrastructure has yet to be installed, so the Nashville-based company decided to bring the mountain to Moses.
“We recognized a demand among our customers for convenient daily charging, reliable private charging networks, and proper charging infrastructure to support their fleet vehicles as they transition to electric,” said Dan Hunter, Yoshi Mobility’s chief EV officer and cofounder.
The company says its 240 kW mobile DC fast charger, which can turn “any EV” into a mobile charging unit, is the first fully electric mobile charger available. It can provide multiple charges in a single trip but doesn’t detail how they charge the DC fast charger or who manufactured it. (I asked for more details, and they replied that they won’t disclose client names or the manufacturer of its DC fast charger yet.)
Yoshi is launching its mobile charger on two GM BrightDrop Zevo 600s and will introduce additional vehicles throughout 2024. It aims for full commercialization by Q1 2025. (I wonder if the Zevo 600 ever charges itself? Yes, I asked that too.)
Yoshi Mobility says it’s already deployed its EV charging solutions to service “major OEMs, autonomous vehicle companies, and rideshare operators” across the US. Its initial customers are made up of large EV operators managing “hundreds” of light-duty vehicles requiring up to 1 megawatt of energy per day that don’t yet have grid-connected EV chargers. I’ve asked Yoshi for details of who it’s working with, and will update if they share that info.
The company says pricing is based on location and enterprise charging needs. Once under contract for service, the service will be deployed to US-based customers within 10 days.
To date, Yoshi Mobility has raised more than $60 million, with investments from GM Ventures, Bridgestone, ExxonMobil, and Y-Combinator in Silicon Valley.
Read more: Mercedes-Benz just opened more DC fast chargers at Buc-ee’s in Texas
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