Oil prices rose to a seven-year high Tuesday amid ongoing provide issues and escalating tensions in the Middle East, but Exxon Mobil CEO Darren Woods mentioned the ultimate trend for prices will likely be lower.
In the instant future, nonetheless, the oil govt mentioned the market ought to count on unstable prices as the business’s restoration from Covid-19 continues.
“As you get provide and demand tighter, occasions that occur round the world … result in a lot extra volatility as a result of there’s much less of a buffer, and I feel we’ll see that for a while now,” he mentioned Tuesday on CNBC’s “Squawk Box.” “Until business begins to ramp up productions and enhance the stage of provide to satisfy this rising demand, or in flip demand begins to come back down a little bit … you are going to see a lot extra volatility till we get higher stability.”
Woods added that it is exhausting to foretell when the market would possibly steadiness out given the many gamers concerned.
West Texas Intermediate crude futures, the U.S. oil benchmark, traded as excessive as $85.74 per barrel on Tuesday, a worth final seen in October 2014. The worth marks a blistering restoration after the contract briefly traded in unfavorable territory in April 2020, as the pandemic sapped demand for petroleum merchandise.
International benchmark Brent crude broke above $88 per barrel, additionally hitting the highest stage since 2014. As producers proceed to maintain a lid on manufacturing whereas demand recovers, some have known as for oil to high $100 per barrel this yr.
But Woods mentioned he would not get “overly enamored” about excessive prices in the present day. When wanting at new investments the firm focuses on making certain operations will be aggressive throughout a big selection of worth environments.
“[W]e anticipated greater prices. We additionally anticipate a lot of volatility. And frankly we’re anticipating lower prices as we go ahead,” he mentioned.
Exxon mentioned Tuesday it is focusing on net-zero greenhouse fuel emissions for its operated belongings by 2050. The announcement follows comparable targets from rivals, and comes as Exxon faces board strain to shift its operations. In 2021, upstart activist agency Engine No. 1 efficiently positioned three of its candidates on the oil big’s board.
Exxon’s goal doesn’t embody so-called Scope three emissions, which embody the environmental footprint from the merchandise a firm generates, in addition to the firm’s provide chain. Scope three emissions are sometimes the highest, and the hardest, to quantify.
Tuesday’s pledge builds on prior bulletins from Exxon round the way it plans to chop its emissions. The firm has additionally pledged billions of {dollars} to develop emissions-reducing applied sciences like carbon seize.
Woods mentioned the goal is “extra than simply a pledge” and that the firm has a “line of sight” for the way it plans to slash its emissions.
“We have roadmaps that we’re creating in every of our services round the world to ship these reductions,” Woods mentioned. “There are plans behind this ambition that takes us clearly via 2030 after which past that. I feel that is ought to give of us some confidence. This is extra than simply on the market positioning on one thing this is truly work that we’re doing.”
The firm mentioned in a assertion that it recognized greater than 150 potential steps and modifications that may minimize emissions throughout its operations, together with electrifying gear and decreasing emissions leaks.
Wood mentioned that additional down the line, technological developments and market incentives will assist drive down the value of dearer decarbonization efforts.
Exxon is the newest in a rising record of firms pledging to slash emissions. But critics observe that at current there is not any enforcement mechanism, that means a few of these guarantees may doubtlessly be with out benefit.
Shares of Exxon superior greater than 1% on Tuesday to their highest stage in additional than two years.
