Khalid al-Falih, the new Saudi oil minister

Khalid al-Falih, the new Saudi oil minister  © Getty Images

Are we on the verge of a real upturn in oil prices? Over the last 10 days, the price has risen almost 20 per cent. Is the talk of a sustainable upturn and a return to the situation of two years ago when oil was over $100 serious, or is the story just a silly season invention at a time when most traders are on holiday?

There are three potential explanations for the rise.

First, something could have changed in the physical market where supply meets demand. That can be dismissed very quickly. Supply is up and demand is flat. Iraq, Russia and Saudi Arabia have all increased supply this year. Iraq in particular, despite the continuing conflict with Islamist militants in the north and west, has managed to reach record production levels of 4.5m barrels a day. US production is slightly down but across the world most producers are maximising output to maintain much-needed revenue flows. Read more

Opposition protestors in Caracas last month amid demands for a refrendum on removing President Nicolas Maduro from power

Opposition protestors in Caracas last month amid demands for a referendum on removing President Nicolas Maduro from power  © Getty Images

After years of decline, the situation in Venezuela is becoming desperate. Could the latest fall in the oil prices provide the tipping point that finally brings to an end the unhappy period of Marxist rule begun by Hugo Chavez in 1999?

In the last two months the oil price has fallen by 20 per cent, ending the hopes of producers around the world that the downward slide of the last two years is over and that prices will soon return to a level that they used to regard as “normal”. For many, the latest fall will be the last straw. Numerous companies have maintained their dividend payments through borrowing. With prices falling again that looks unsustainable. Many, including the state companies, also face hard investment decisions on projects that need higher prices to be viable. With capex requirements outstripping revenue and little prospect of raising more money through rights issues more projects will be postponed or abandonedRead more

Theresa May, UK prime minister

Theresa May, UK prime minister  © Getty Images

All new leaders face tests. Do they mean what they say? Will they flinch or give way under pressure? For a prime minister the tests can come from any direction — from the trades unions, from the Kremlin, from political opponents, from dissident backbenchers. Theresa May’s first test as British premier has come from the Chinese in the form of a remarkable article in the Financial Times.

Liu Xiaoming, the Chinese ambassador to the court of St James, does not like the idea that the new UK government should be reconsidering the plan to build a nuclear power station at Hinkley Point in southwest England, and by implication the idea that Chinese companies should own, build, operate and control a further nuclear plant at Bradwell in Essex, in the east of the country.

The article is puzzling. What sort of diplomat negotiates on serious issues through the media? Wouldn’t they normally work discreetly to identify the cause of the problem — if there is one — and then seek to find a quiet solution? Issuing threats is not very diplomatic. Indeed, the article reads as if it had been written by a PR firm instructed to put pressure on ministers. One wonders how Beijing would react if the British ambassador there were to write an article demanding that Hong Kong be allowed to choose its own leaders. Read more

Sameh Shoukry, Egypt's foreign minister, who was visiting Israel last week

Sameh Shoukry, Egypt's foreign minister, who was visiting Israel last month  © Getty Images

The world has discovered a new province rich in energy supplies. Three major discoveries of gas have been made in the eastern Mediterranean over the last few years and there is the prospect of much more being found in areas still to be explored. That makes the region one of huge international interest. The only challenge is getting the gas to the markets in which it will be used, and that is a problem not of geography or technology but of politics.

How to resolve this new “Eastern Question”? For years the absence of a satisfactory answer has stalled the development of the Israeli and Cypriot fields and deterred further exploration. But now it begins to look possible that a combination of circumstances has opened the door to a practical solution.

The eastern Mediterranean — often described as the Levant Basin — covers the stretch of water that runs from the northern coast of Egypt up past Sinai, Israel, Lebanon, Syria and Cyprus to the southern coast of Turkey. The three big discoveries are the Leviathan field 130 km off Haifa in Israel, the Aphrodite field just east of Leviathan offshore Cyprus and Zhor in Egyptian waters 120 miles north of Port Said. Read more

This could be a chance to accelerate projects from lower cost nuclear providers, writes Nick Butler Read more

The French economy minister Emmanuel Macron visits the Civaux nuclear power plant operated by EDF, which is 85% owned by the state

The French economy minister Emmanuel Macron visits the Civaux nuclear power plant operated by EDF, which is 85 per cent owned by the state  © Getty Images

The saga of Hinkley Point goes on. The UK government is right to delay approval of a project in which it has lost confidence. The EDF board may have approved the deal to build a new nuclear power plant in Somerset, southwest England, but the obvious risks were such that the only prudent response is to pause and to reconsider all the options. The government must be right in wanting to avoid locking the UK into an expensive source of supply at a time when the costs of every alternative — including natural gas, solar and wind — are falling. In the post-Brexit world competitiveness is critical.

Theresa May, the prime minister, has also appreciated that approval of the project is now a UK bargaining chip in Britain’s relationship with the French. Cancelling the Hinkley project would destroy the thousands of jobs promised along the supply chain – most of which is located in France. The pressure is now on President François Hollande, who faces a very difficult re-election campaign next year, to force EDF to come up with a much better offer. Read more

The board of EDF meets in Paris on Thursday morning to discuss its long-planned investment in a new nuclear power station at Hinkley Point in Somerset, southwest England. There is speculation that the meeting will come to a definitive decision after years of delay. If the outcome is to go ahead, the French company has work to do in rebuilding trust. So what should investors and consumers be looking for ?

To begin with, it is important to put aside the fanciful idea that the announcement is simply a matter of French politics. Most of the jobs created by Hinkley will be in the supply chain in France and the argument is that President François Hollande needs to ensure that they are not put at risk before the presidential election next year. Read more

The figure of Christo Redentore above Rio's Maracana stadium, site of the Olympic opening ceremonies

The figure of Christo Redentore above Rio's Maracana stadium, where the Olympics will open  © Getty Images

With so much attention focused on the questions of Brexit and the American presidential election it is miss the problems of other parts of the world. Latin America is a prime example of a continent easily forgotten. But while there may be a sort of peace agreement between the government and the rebels in Colombia, in Venezuela the economy continues to disintegrate and in Brazil the whole structure of society appears to be unravelling.

I will look at Venezuela in a later post. For now let’s consider Brazil. Over the next few weeks international audiences will be swamped with TV coverage presenting the glamorous image of the Olympics, which Rio is hosting for the first time. But behind the pictures of the Christo Redentore statue and no doubt some stunning performances from the athletes, there is a dark side to a country crippled both by a recession as bad as anything seen in the last century and by a deep loss of confidence in the institutions of government and commerce. Read more

Greg Clark leaves 10 Downing Street as the new business, energy and industrial strategy secretary

Greg Clark leaves 10 Downing Street as the new business, energy and industrial strategy secretary  © Getty Images

A changing of the guard in an organisation is a good time at which to pause and reconsider every aspect of strategy. The mistakes of the past can be admitted, entrenched but outdated positions can be quietly left behind and altered circumstances accepted. That is what should happen now in the UK in relation to energy policy. Read more

Energy demand in China appears to have decoupled from GDP

Energy demand in China appears to have decoupled from GDP  © Getty Images

The changes taking place in the world energy market are not just a matter of oversupply or the unwillingness of Saudi Arabia to rein in production. Demand has stagnated and in some areas is falling. The fall is unexpected — all the standard projections still cheerfully predict ever rising demand driven by population growth and the spread of prosperity in emerging economies. That assumption, however, begins to look too simplistic. The reality is more complex and, for producers, much more challenging. Forget the old debate about peak oil. Now it seems we are approaching peak energy. Read more

The Apple logo on display at the Worldwide Developer's Conference in San Francisco this month

The Apple logo on display at the Worldwide Developer's Conference in San Francisco this month  © Getty Images

Revolutions often begin with small prosaic steps. Three weeks ago, a company filed for permission from the US Federal Energy Regulatory Commission to sell electricity to individual consumers. Hardly an exceptional event – except that the company’s name is Apple and the move marks the beginning of a restructuring in the energy market that will reshape the sector across the world over the next decade.

Two years ago I wrote a column headlined Google Energy, Amazon Power about the possibility of new players disrupting the settled landscape of the energy business. The piece provoked some interest and much scepticism. Why would companies that knew nothing about energy want to venture into a specialist market where they would have to compete against powerful vested interests? Read more

George Osborne visiting the Montrose Platform in the North Sea

George Osborne visiting the Montrose Platform in the North Sea  © Getty Images

At one level, the UK’s exit from the EU should have very little impact on the energy business. The price of oil, gas and coal is set by international markets not by the institutions in Brussels. The EU has never had the authority to determine the energy mix of individual member states and even under the latest plans for an “energy union” different countries would retain in full the ability to choose whether they want to develop shale gas or to eliminate nuclear power. Read more

Oil rigs left in the Cromarty Firth, Scotland  © Getty Images

Is the North Sea doomed to enter a period of terminal decline once the current set of field developments is completed? Or can strong leadership from the UK’s new Oil and Gas Authority and radical thinking take it into a successful fifth decade? The answer is unclear but should be a matter of real concern to the UK Treasury and the Scottish government as well as to the companies directly involved and their staff.

Most of the facts are clear and undisputed.

For the moment production volumes are being sustained by virtue of projects sanctioned before oil prices started to fall in 2014. That should continue through to 2017. But the pipeline of activity beyond that is drying up. New exploration, in particular, has dwindled to minimal levels. It would be surprising if more than half a dozen exploration wells are drilled this year. Read more

Sampling crude oil at well operated by Venezuela's state-owned oil company PDVSA

Sampling crude oil at well operated by Venezuela's state-owned oil company PDVSA  © Getty Images

In strong contrast to the previous downturns in the energy market the sharp falls in prices seen over the last two years have not triggered a wave of restructuring in the industry. Merger and acquisitions activity has been minimal. But is that about to change? Could a wave of privatisation now reshape the business landscape?

Cyclical downturns in the oil and gas sector are relatively common and have occurred roughly once a decade since the 1980s. The response has traditionally followed a well-trodden path. Companies cut costs and postpone projects. They push for tax concessions and improved terms, while trying to maintain dividends. When that fails, heads roll and the stronger brethren take over the weak. Read more

Celebrations in Tahrir Square after the ousting of Egypt's President Hosni Mubarak in February 2011

Celebrations in Tahrir Square after the ousting of Egypt's President Hosni Mubarak in February 2011  © Getty Images

Remember the Arab Spring and the heady promise of freedom and peace in the Middle East? Many normally sensible observers were carried away by the excitement of the internet-led revolution in Tahrir Square and across the region. Now, a similarly happy transformation is promised in the energy market as the world moves away from oil, gas and coal. The transition is certainly coming but its implications will be as disruptive and dangerous as those of the Arab Spring. We should be prepared for the consequences rather than misled by wishful thinking.

The shift to a low-carbon energy system will be smooth, orderly and beneficial for most of the global economy: that is the view of a new set of papers from the Global Agenda on the Future of Oil and Gas – a group set up by the World Economic Forum, the organisers of Davos. Unfortunately, all the evidence so far points in the opposite direction. The shift may be beneficial in terms of the world’s environment, but economically and politically the result could be dramatically destructive. Read more

A solar farm in France. A European common grid would help overcome the problem of intermittancy with renewables  © Getty Images

With a few honourable exceptions, the debate on British membership of the EU has so far consisted of a contest between the outs and the half outs – that is, those who want Britain to leave completely and those prepared to stay only if the country is protected from further incursion by immigrants or European policy makers. The other approach – active engagement to change and improve what happens – has barely been articulated. In several areas positive engagement is much needed and offers substantial benefits. Energy policy is a good place to start.

The EU has only limited competence when it comes to energy policy. The mix of fuels and the tax system under which they are traded remain matters of national choice. That isn’t likely to change. It would be a waste of time to try to force France to accept fracking or to tell the Germans that they are going to have to keep nuclear power. Any attempt to centralise such emotive decisions will fail. Read more

A gas storage facility outside Lviv, Ukraine

A gas storage facility outside Lviv, Ukraine  © Getty Images

Can anything reverse the decline of natural gas as a source of primary energy in Europe? Gas demand in 2015, despite a fractional uptick on the 2014 figure, was 20 per cent below the level reached a decade ago. Unless something changes radically, Europe has passed the point of peak gas consumption. The promise of “a golden age of gas” talked up by the industry and some commentators a few years ago looks very tarnished.

The reasons for this are obvious. In the absence of a carbon price, coal is cheap and in countries such as Germany it retains crucial political support because of the jobs it involves. Renewables are subsidised. So gas is squeezed, especially in the power sector because efficiency gains and slow economic growth have kept total electricity demand down. Read more

Construction of the EPR at Flamanville, northwest France

Construction of the EPR at Flamanville, northwest France   © Getty Images

The cloud of doubt around EDF’s long-planned new nuclear plant at Hinkley Point in Somerset continues to grow.

The final investment decision has been delayed yet again. The start up date has been put back to 2026 – nine years behind the original schedule. A new contingency, amounting to £2.7bn, has been added to the cost of the project.

Now, in a remarkably frank interview the French energy minister, Segolene Royal has said that the company may have been “carried away” by its enthusiasm for the project and has joined the chorus of internal staff and engineers in warning of the risks to EDF’s finances from going ahead. But although Hinkley inevitably gets all the attention in the British press, EDF’s real problem is to be found in the half constructed plant at Flamanville on the Cotentin Peninsula on the other side of the English Channel. Read more

Traders follow the market at the Kuwaiti Stock Exchange

Traders follow the market at the Kuwaiti Stock Exchange  © Getty Images

Why did the oil price fall 70 per cent during the two years from the spring of 2014? And why, after falling from $115 a barrel to $30, has it now risen to something around $45 over the last two months? What has changed to explain these big shifts ? I was asked these questions by a friend last week and they are worth an answer.

One thing is clear. Oil demand did not fall by 60 or 70 per cent in that period and has not risen by 50 per cent in the last two months. Demand has continued to grow modestly by about 1m barrels a day each year. Oil supply has increased — by a little more than the growth in demand but certainly not 60 or 70 per cent. In the real energy economy things change much more slowly.

At one level, the imbalance between the growth of demand and the growth of demand explains the fall in prices. Led by extra supplies from Saudi Arabia and Russia and lower than expected demand from China, it explains the context of the fall, but not the scale or duration. Read more

Deputy crown prince Mohammed bin Salman answers questions in Riyadh on Vision 2030  © Getty Images

Saudi Arabia is in a mess. That conclusion seems to be common ground — the view of serious outside analysts and of the country’s own government. The only question is whether the problems can be corrected by shock treatment of the sort announced in Riyadh last week.

The immediate challenge is clear. Last year, revenue from oil exports fell by 23 per cent. That matters in a country that is 77 per cent dependent on oil income. Unemployment is officially 11.6 per cent, not counting the millions who hold non-jobs in and around the agencies of the state. In total, 70 per cent of Saudis work for the government. In the first half of last year, according to Mohammed al-Sheikh, the chief economic adviser to the all-powerful deputy crown prince, Mohammed bin Salman (known universally as MbS), the kingdom’s financial reserves were being drawn down at a rate that would have exhausted them by the end of 2017 — far earlier than had previously been estimated by outside authorities such as the International Monetary Fund. Read more