Abu Dhabi Oil Summit Confronts Iran Threat, Sidesteps Demand Destruction
Global oil leaders gathered in Abu Dhabi on Sunday ahead of the Middle East’s largest energy industry event to gameplan strategies for a multitude of risks, from a feared U.S. strike on Iran to potentially crippling cyberattacks. But the elephant in the room is what wasn’t openly discussed: the systemic threat posed by structural demand destruction.
A year of geopolitical turmoil, drone attacks and higher commodity prices has taken its toll on the world’s thirst for oil and gas. In a private conversation with reporters on the sidelines of the invite-only event — held under the Chatham House Rule — one senior executive who closely follows market conditions said global demand may already have contracted by 3 million b/d.
The executive’s view, which they said may explain why oil prices have not pushed beyond historic thresholds despite unprecedented disruption to flows through the Strait of Hormuz, is even more pessimistic than that of the often-bearish International Energy Agency. The Paris-based energy watchdog said in October that it expects consumption to fall by 2.6 million b/d in 2026.
A blip in oil demand would be fine if the market rebounds in 2027 as the IEA predicts. But the executive feared structural damage may have been inflicted, especially in developing countries and China, which has doubled down on road transport electrification, including light trucks. Diesel consumption in China is expected to drop by 11 percent in 2026, marking its biggest annual drop in almost 50 years, according to Sinopec’s research arm EDRI.
The executive feared that weaker structural demand and a rush by producers to increase output in a race for market share may converge next year in the unlikely event that normality returns to the Middle East — which could result in oil prices falling back to the $70/bbl range.
‘Democratization of risk’
Meanwhile, in the main debate, the affordability part of the so called “energy trilemma” was largely skimmed over as the conversation mainly focused on threats posed by cyberattacks, drone warfare and a lack of investment in what one participant described as the “democratization of risk.”
The widening gap between the cost of transport fuels and crude oil was blamed on a chronic underinvestment in refineries and infrastructure, especially in Europe, where governments have been among the most aggressive to decarbonize transport. “In Europe, too many [are] saying oil is not needed,” said one oil company executive.
Under pressure from Germany, policy makers in the European Commission have in recent weeks launched an industry-wide consultation on a new refinery strategy. One executive participating in the debate took a harder line, warning that their company would shut down its European refineries if the bloc persisted with its energy transition plans.
“What is required today is very different to [the] market we have,” said another executive speaking at the event, which foreruns the ADIPEC conference and exhibition.
Despite concerns that President Donald Trump may launch a new wave of strikes on Iran soon after Tuesday’s mid-term elections — possibly triggering Tehran to lash out at U.S. allies in the region — the event in Abu Dhabi has attracted a strong turnout from the industry, even with the absence of a few high-profile invitees like Exxon Mobil Chief Executive Darren Woods.
Deadly drone strikes on Riyadh’s airport just a few weeks earlier cast a shadow on another major energy gathering, hosted by Saudi Arabia, that saw several featured speakers withdraw. The United Arab Emirates has already been targeted several times during the lingering conflict, but on Sunday the exhibition center was filled with companies preparing for the event.