Industry

Oil prices could surge to more than US$100/bbl if the crisis escalates further. (Image source: Adobe Stock)

The escalating crisis in the Middle East is triggering fears of sky-high oil prices

Oil prices could surge to US$100 a barrel if Iran's missile attack on Israel triggers a retaliatory cycle that targets energy infrastructure or closes the Strait of Hormuz, according to the latest analysis from Bloomberg Intelligence. It notes that for now, oil output and flows remain undisrupted, and upward pressure on prices may remain subdued after a 5% jump on 1 October, if escalation is avoided.

Iran's direct missile attacks on Israel have had a relatively muted impact on oil prices, with oil output and flows remaining undisrupted thus far, though a retaliatory cycle targeting energy infrastructure would result in a larger price spike. Direct attacks on energy facilities could severely disrupt oil production in the Gulf, as Yemeni drone attacks on the Abqaiq oil facilities did in 2019.

Salih Yilmaz, senior energy industry analyst at Bloomberg Intelligence commented, “In the extreme-case scenario, closing of the Strait of Hormuz could drive prices above US$100 a barrel. The strait is the only maritime route out of the Gulf, making it the world's most vital oil-supply bottleneck, with its daily flow of 21 million barrels, roughly 20% of global consumption.”

Iran's last direct attack on 13 April had a limited impact on oil prices as further escalation was avoided, Bloomberg notes.

Rystad Energy chief economist Claudio Galimberti commented, “The intensifying conflict in the Middle East is generating significant supply concern in the global crude market, with prices up more than 4% this week. The potential for supply disruptions – particularly, but not exclusively from Iran – increases as the fighting intensifies.

“But OPEC+ still sits on unusually ample spare capacity, which is the result of successive production cuts over the past two years. This spare capacity is for now preventing runaway prices amid one of the deepest and most pervasive crises in the Middle East in the past four decades.”

Rystad notes that currently, Iran produces approximately 4mn bpd of crude, exporting about half of that, mostly to China. OPEC+ spare capacity is currently more than 5mn bpd, which could be deployed relatively quickly to fill the gap. However, any blockage to the Strait of Hormuz would result in runaway prices.

The launch of the new facility. (Image source: Emerson)

Emerson has opened a new manufacturing and innovation hub at the King Salman Energy Park (SPARK) as part of its Middle East expansion

The 13,000 sq m facility brings the company’s automation technology portfolio together under one roof, including mission-critical control and safety systems, measurement instrumentation, control valves, isolation valves, pressure relief valves, solenoid valves and industrial lighting assemblies.

It is envisaged that the hub will reduce dependency on imported goods, strengthen supply chains and improve self-sufficiency in critical industrial manufacturing value chains within the Kingdom, in line with Saudi Vision 2030.

In furtherance of Emerson’s net zero emission goals, the manufacturing hub is equipped with energy-efficient technologies and renewable energy sources, including rooftop solar power generation, compressed air optimisation and lighting system optimisation.

Contributing to Vision 2030

"This new facility reinforces Emerson’s position as a key player in the industrial sector in the Kingdom and contributes to Saudi Arabia’s long-term Vision 2030 of strengthening local talent, boosting supply chain localisation and advancing sustainable growth," said Mathias Schinzel, president of Emerson Middle East and Africa.

“We are proud to collaborate with Emerson to support their new cutting-edge manufacturing hub at SPARK,” said Mishal I. AlZughaibi, SPARK President and CEO. “With the establishment of these facilities, we are closer than ever to achieving our localisation goals.”

"As part of Emerson's contribution to the 'Made in KSA' initiative, Emerson’s facility will serve domestic and regional markets with advanced technologies designed to meet the evolving needs of various industries, further solidifying Saudi Arabia's position as a leader in localised manufacturing and innovation," added Hussein Zein, vice president of Emerson in Saudi Arabia and Bahrain.

Emerson opened its first local valves manufacturing facility in Jubail in 2011 and has expanded its manufacturing footprint over the years to include facilities in Dammam and its Saudi headquarters Dhahran Techno Valley in 2018.

The event will feature more than 600 major global brands from 33 countries. (Image source: Expo Centre Sharjah)

Expo Centre Sharjah is set to host the 20th edition of SteelFab, the Middle East’s leading event for metalworking, metal manufacturing and steel fabrication industry, from 13-16 January 2025

The exhibition is expected to see extensive participation from local and international companies and manufacturers, featuring more than 600 major global brands from 33 countries showcasing their latest technologies and innovations in the metalworking field. The SteelFab trade show brings together eminent local and international players in the iron and steel industry to showcase state-of-the-art machinery, equipment, and tools pertinent to the metal industries, welding and cutting, pipe manufacturing, and other related sectors. Participants will represent the industry’s largest industrial companies from countries like the UK, Germany, India, Taiwan, China, Italy, and Turkey. The exhibition will also host some of the most prominent UAE-based companies.

Strengthening Sharjah’s position as a regional metal production hub

HE Saif Mohammed Al Midfa, CEO of Expo Centre Sharjah, affirmed that SteelFab is the region’s premier event for the metal-manufacturing and steel fabrication industry. It serves as an important platform for manufacturers and companies operating in the field to showcase their latest products and services and connect with potential clients and partners. This will consequently enhance Sharjah’s status as a central hub for the metal industry in the Middle East.

He further noted that the exhibition has demonstrated remarkable success over the past twenty years, reflected in the high participation rates in previous editions. The new edition is expected to draw over 125 international companies and 170 local firms, indicating an increase in the number of exhibitors compared to previous years. Additionally, there is an anticipated acceleration in the turnout of visitors representing various industrial sectors, promising a successful edition that showcases the latest technologies and advanced equipment in the steel industry.

Advanced modern technologies

The SteelFab 2025 exhibition places special emphasis on the latest technologies and cutting-edge equipment used in the iron and steel industries. The upcoming edition will host a two-day conference dedicated to the latest industry innovations, alongside market analysis and emerging trends in machine innovation and the application of Artificial Intelligence (AI). To enhance connectivity among steel industry leaders, the exhibition’s 2025 edition features a Buyers Program that offers exclusive networking opportunities between top industry specialists and exhibitors. The program is anticipated to attract over 200 key industry figures.

The exhibition will spotlight the latest trends and advancements in the manufacturing, iron, and steel sectors, featuring extensive displays of state-of-the-art laser equipment and metal cutting systems. It will also witness the 4th edition of the Best Welder competition, which is designed to honor welding talent, offering a platform for professionals to demonstrate their skills and vie for excellence awards.

The joint venture will leverage innovations in AI, smart drilling design, completions engineering and production solutions to accelerate the UAE’s unconventional oil and gas well programme. (Image source: SLB)

SLB, ADNOC Drilling Company and Patterson-UTI are joining forces to create a new joint venture, Turnwell Industries LLC OPC, which will leverage innovations in AI, smart drilling design, completions engineering and production solutions to accelerate the UAE’s unconventional oil and gas programme

This follows the successful and efficient delivery of the first wells in the campaign.

SLB will provide integrated drilling, stimulation and completion services, as well as project management, digital capabilities and subsurface support as part of the venture. ADNOC Drilling, through its wholly owned subsidiary ADH RSC LTD, will hold a 55% majority equity stake, SLB a 30% equity stake and Patterson-UTI the remaining 15% equity stake.

Turnwell was established to be the unconventionals drilling arm of ADNOC Drilling and execute a US$1.7bn contract, awarded to ADNOC Drilling, to provide drilling and associated services to deliver 144 unconventional oil and gas wells. Following Turnwell’s efficient and successful start-up and operational delivery, ADNOC has accelerated the campaign’s completion timeline. The economic impact of the acceleration will benefit ADNOC Drilling’s 2025 earnings as well as its long-term growth through the potential acceleration of phase two with thousands of wells.

Deploying innovative technologies

"We are proud to join forces with ADNOC Drilling in this strategic partnership that demonstrates SLB’s leading position in the region deploying innovative digital, drilling and completion technologies in developing unconventional energy resources,” said Tarek Rizk, SLB’s president for the Middle East and North Africa region. “UAE’s unconventional energy assets hold a promising future, and we are very much looking forward to elevating their performance in a safe and sustainable way.”

“Today marks a defining moment for Turnwell and our key partners SLB, and Patterson-UTI. The acceleration of the well programme is a testament to the innovation, collaboration and pursuit of excellence that will define our joint venture,” said Abdulrahman Abdulla Al Seiari, chief executive officer, ADNOC Drilling. “Turnwell will not only unlock the immense potential of the UAE's world-class unconventional energy resources but will also set new benchmarks for the global energy industry. We are proud to lead the way in responsibly shaping the future of energy, both in the UAE and beyond."

To achieve this accelerated timeline, Turnwell has adopted batch drilling, which improves efficiency and reduces costs. The involvement of Gordon Technologies, a provider of Measurement While Drilling (MWD) technology and an Enersol company, is also set to enhance efficiency. MWD technology reduces drilling time, improves well-bore quality, and increases overall drilling efficiency.

Abu Dhabi holds an estimated 220bn barrels of unconventional oil and 460 TCF of unconventional gas in place.