What are the biggest threats to oil and gas next year?

In 2019, the oil sector witnessed several transformations related to the global political and economic climate, with demand growth reaching its lowest levels.

In a report published by OilPrice, Tsvetana Paraskova talked about the most prominent threats to the oil and gas industry in the world in 2020.

The most prominent challenges for the coming year are slowed by slowing oil demand growth, potential shifts in US domestic and foreign policies after the presidential election, and continued pressure on industry to tackle the climate change dilemma.

In addition to the lack of confidence in the stock markets in energy-related stocks, and low levels of financing for natural gas projects.

Poor demand growth
This year, oil demand growth is the weakest since 2011, as the slowdown in global economic growth and the trade war between China and the United States overshadowed the global economy, including the fastest growing oil import markets in Asia.

The first stage of the trade deal during the past week is considered a retreat from the escalation in the trade war, and it is likely to help increase the oil demand forecast for the year 2020.

And all analysts expect that the demand growth will rise next year compared to the very low growth for this year, as Wood Mac expects the demand for oil to grow more than twice, i.e. about 1.35 million barrels per day, thanks to the supply of Chinese marine diesel fuel and the increase in demand for liquid natural gas. For the growth of the American petrochemical industry.

The International Energy Agency still sees a surplus of oil supplied to the market, especially in the first half of 2020, despite the efforts made by OPEC Plus in strict commitment to reduce production, and the pledge of the leader of the organization (Saudi Arabia) to continue to reduce supplies.

It is noteworthy that if oil demand growth in 2020 disappointed the expectations again, OPEC Plus will face a difficult task to restore balance to the market.

Elections and oil policies
And if a Democratic candidate defeats President Donald Trump during the 2020 elections, the United States' policies may be radically rethought globally, which will have a major impact on the energy industry.

For example, the sanctions currently imposed on Iran and Venezuela exclude about two million barrels of oil from the market.

On the other hand, a Democratic president's change of American policies on economic sanctions and Iran's nuclear deal is likely to increase supply and flood the market.

However, it is difficult for the president alone to be able to pass legislation to stop cracking oil and gas in the United States.

Combating climate change
The "green new deal" for the European Union could lead to the global acceptance of taxes and tariffs aimed at protecting the EU's products from imports that cause high carbon emissions, according to analyst at Wood Mac Simon Flowers.

Under the deal, the European Union pledged to cut emissions by at least 50% by 2030.

credibility
The notorious oil and gas sector has failed to market itself as part of the solution, not the problem, as investors continue to ignore energy stocks due to concerns about future oil demand.

According to Wood Mac, major oil and national oil companies should follow in the footsteps of Repsol in its commitment to carbon neutrality by 2050.

Transitional fuel financing
The world needs adequate levels of funding for natural gas and liquefied gas projects as it will play the role of transitional fuels to maintain the stability of energy supplies in a mixture of solar and wind energy at the global level.

According to Flowers, the industry needs to do more during 2020 to demonstrate the benefits of gas and its environmental specifications, as well as carbon sequestration and storage, to ensure that funding for gas projects is not depleted.