Good morning and welcome back to Energy Source, coming to you from New York.

The International Energy Agency releases its monthly oil report today and there are mixed views on OPEC demand. The IEA predicts that crude oil consumption will increase by 1.3 million barrels per day this year, while OPEC this week maintained its growth forecast of 2.25 million barrels per day in 2024.

Meanwhile, Shell has weakened some climate targets in the first overhaul of its three-year energy transition strategy. The revision comes after the company pledged last year to spend a higher proportion of its spending on oil and gas, and comes as other oil groups such as BP have also slowed their retreat from oil.

International benchmark Brent crude rose more than 2% yesterday to hit a four-month high after Ukraine carried out drone attacks on Russian refineries and the United States announced a 1.5 million barrel inventory reduction. U.S. West Texas Intermediate crude oil prices rose 2.6%.

In the Middle East, BP and Abu Dhabi's National Oil Co. suspended talks to buy a $2 billion stake in an Israeli gas field, one of the first major corporate deals to emerge from the Gaza war.

In other news, Enviva, the largest U.S. wood pellet producer, filed for bankruptcy yesterday after a bet that pellet prices would rise following Russia's invasion of Ukraine backfired, costing the company millions of dollars. “The market is bearish,” said Erisa Senerdem, head of biomass pricing at Argus Media. “Pellets producers in the U.S. and Europe remain under pressure to limit increases in production costs and/or reduce production costs.”

Today's newsletter dives into Bain's exclusive survey of more than 600 energy executives about the energy transition and where it's headed. This is a good primer on industry thinking at next week's CERAWeek conference. We'll be there, so drop me a line at amanda.chu@ft.com.

thanks for reading,

amanda

What to see at CERAWeek 2024

Thousands of energy executives and leaders will arrive in Houston next week for the annual CERAWeek conference hosted by S&P Global, one of the largest energy gatherings in the world.

A new survey of more than 600 executives released this morning by Bain & Company takes the pulse of the energy industry ahead of the conference as geopolitical turmoil, tough macroeconomic conditions and artificial intelligence innovation spur Changes in energy markets.

According to the Bain & Company report, CERAWeek has the following four themes to watch:

Energy executives are pushing back on transition forecasts

A growing number of executives expect the energy transition to slow. The Bain survey showed that more than 60% of people expect the world to reach net-zero emissions by 2060 or later, up from 54% last year. Oil and gas executives are most likely to agree.

Expectations for the transition have also slowed as companies U-turn on climate commitments and as governments increase investment in fossil fuels amid concerns over energy security. The 2015 Paris Agreement calls on countries to achieve net-zero emissions by mid-century, limit warming to 1.5 degrees Celsius and avoid the worst consequences of a looming climate catastrophe.

Return on investment is the biggest obstacle

Bain said the biggest obstacle to delaying transformation expectations is the severe macroeconomic environment. High interest rates and the capital intensity of building clean energy projects make it difficult for companies to finance projects, with 70% of executives citing a lack of returns or customers' willingness to pay as a significant obstacle, a 14% increase from last year.

While policies can help offset higher capital costs, the uncertain political environment makes it difficult for executives to plan projects. Bain found that 70% of energy executives said reducing policy uncertainty would “very significantly” improve their ability to focus on transformation.

“All of these things will allow you to see net-zero emissions happening later on,” Bain partner Grant Dougans told Energy Source.

But executives are optimistic about transformation

Although the transition to net zero is expected to be slower, executives remain optimistic about the transition, especially those from the Middle East, Asia Pacific and Latin America.

North America is the top investment destination for global executives, followed by Europe. Bain said U.S. President Joe Biden's landmark climate law, the Inflation Cutting Act, which includes lucrative tax credits for clean energy and the availability of cheap natural gas, was a key draw factor.

Still, U.S. executives want better, clearer policies. More than 40% of executives disagree that IRA subsidies are easy to obtain, and nearly one-third believe the policy does not have the long-term stability to support investment decisions.

Artificial intelligence cannot save the world

Energy executives are skeptical that the artificial intelligence boom will help reduce global emissions. Only a quarter of respondents think generative AI can help reduce carbon intensity, and about a fifth think it can help reduce emissions.

Doubts arise as the proliferation of power-hungry AI data centers threatens a crumbling power grid. But executives believe AI can improve supply chains and production.

“Artificial intelligence is a real opportunity for energy companies to think about improving operations and running operations more efficiently,” Dawgens said. “It's not a panacea.”

Job changes

• Jose Luciano Duarte Penedo from valleyThe board has accused the Brazilian miner of “nefarious political influence” on the succession process for its next chief executive.

• blood pressure Appointed Aviva CEO Amanda Blank as the next senior independent director, the first major shakeup of the oil giant's board since the CEO's departure Bernard Looney.

• Steve HillHead of LNG Trading shellwill leave the company after eight years.

• Hitachi Energy appointment Andreas Schellenbeck As the new CEO, replace Claudio Fachin End of June.Schillenbeck joins HH2Ea green hydrogen energy company.

• SSR mininga Colorado miner, was appointed Michael Sparks serves as chief financial officer, replacing Alison White. Sparks currently serves as chief legal and administrative officer.

power point

Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu and Tom Wilson, with support from the Financial Times' global team of journalists. contact us: energy.source@ft.com and follow us on @FTEnergy.Learn about past editions of the newsletter here.