On Day 2 of RBN and Novi’s School of Energy in Houston, Novi Vice President of North American Energy Markets David Braziel spoke with Phillips 66 Vice President of Investor Relations and Chief Economist Sean Maher for a candid conversation about global developments reshaping U.S. energy markets.
During Thursday’s conversation, they examined recent “black swan events,” including the closure of the Strait of Hormuz and the capture of former Venezuelan President Nicolás Maduro, and their potential implications for energy prices, supply security and U.S. market dynamics.
“What the closure of the Strait did is force the rest of the world, and the U.S. in particular, to look towards energy security in their own markets,” Maher said.
Maher said that the closure of the Strait has shown the U.S has a substantial regional price advantage, and U.S. prices were about one-third of those in Europe and global buyers will keep coming to the U.S. to secure supply. “The world is looking for reliable low-cost energy and they’re going to the U.S,” he added.
Asked which leading indicators he follows, Maher acknowledged major geopolitical shocks can sharply disrupt markets. Still, he stressed that analysis should return to the underlying drivers of energy demand and supply after periods of extreme price volatility.
“There’s always some reversion to the mean when you have massive dislocations of price … so you have to ground yourself on the fundamentals.”
Those fundamentals include economic and population growth, as well as the outlook for long-term energy demand. “What is the economic outlook of the global marketplace and what does that trend?” he said, adding that policy is often what disrupts that trajectory.
