Oil prices saw a significant rally following news of a U.S.-China trade deal, easing fears of a global economic collapse. Despite this positive development, ample oil supply keeps the potential for further price increases limited. As of Tuesday, May 13, 2025, ICE Brent settled at $66 per barrel, with no immediate signs of breaking the $70 mark.
Key Energy Market Developments:
- A series of mergers and acquisitions in the U.S. power sector has led to a year-to-date total of $51 billion, setting the stage for a potential all-time high in power sector M&A deals. The biggest wave of M&A activity occurred after COVID-19, with $55.7 billion spent on corporate takeovers.
- The rise in demand for energy from artificial intelligence (AI) is also influencing the market’s response to these deals. Notably, NRG Energy saw a 26% surge in its stock after announcing the acquisition of LS Power.
- Acquiring operational power generation assets is proving much cheaper than building new gas plants. The cost of constructing new gas-powered capacity has tripled, rising from $800 per kW to $2,400 per kW in less than two years.
Market Movers:
- APA Corporation (NASDAQ:APA), a Permian Basin-focused company, agreed to sell $608 million worth of assets to Permian Resources across 13,320 net acres in New Mexico.
- NRG Energy (NYSE:NRG) has agreed to acquire power generation assets from LS Power in a deal valued at $12 billion, expanding its natural gas-powered generation capacity.
- ExxonMobil (NYSE:XOM) plans to invest $1.5 billion into the Usan oil field in deepwater Nigeria, aiming to reverse production declines from 45,000 barrels per day to 33,000 barrels per day.
- Blackstone (NYSE:BX) is reportedly negotiating a deal to acquire TXNM Energy, a utility firm based in New Mexico and Texas, for over $11 billion, including debt.
U.S.-China Trade Deal:
The U.S. and China agreed to reduce tariffs on most goods by 115%, marking a 90-day pause in their trade war. The agreement cuts the tariff on U.S. goods to 10% while Chinese goods are now subject to a 30% tariff.
Oil Supply and Market Outlook:
Saudi Aramco (TADAWUL:2222) reported a 4.6% drop in Q1 profits, largely due to lower sales and higher costs, but still maintained its $85.4 billion dividend for the year. Meanwhile, OPEC+ remains committed to flooding the market with oil, limiting the upside for prices.
U.S. Strategic Petroleum Reserve:
The U.S. Congress’ Energy and Commerce Committee proposed a $1.5 billion allocation for the 2026 fiscal year to replenish the U.S. Strategic Petroleum Reserve, covering 22 million barrels of government purchases and 220 million in maintenance costs.
Global Energy Developments:
- In Norway, Equinor’s Johan Castberg oil field in the Barents Sea halted operations due to an oil leak, though it is expected to resume production by the end of the week.
- Oman plans to sell minority stakes in its Block 6 natural gas assets, aiming to raise at least $8 billion from untapped reserves.
- TotalEnergies (NYSE:TTE) is negotiating a return to Indonesia’s offshore sector, potentially acquiring a stake in Petronas’ Bobara project.
- Venezuela’s oil is reportedly being disguised as Brazilian crude as Chinese refiners purchase it, with an estimated value of $1.2 billion.
Other Key Developments:
- Saudi Aramco’s profits dipped, but Asian demand for Saudi oil remains strong, with refiners in China securing a one-year high in imports.
- Namibia’s oil industry still faces delays, with TotalEnergies pushing the final investment decision for the Venus project to late 2026.
- Solar energy stocks surged by more than 10% amid speculation that China’s solar wafer producers will cut production, potentially boosting prices.
- Vietnam is moving forward with plans to expand its nuclear power capacity, with agreements under discussion with Russia, South Korea, and France.
The oil and energy markets continue to shift amidst global trade deals, new acquisitions, and evolving energy needs. As prices fluctuate, the future of energy investments looks poised for continued growth despite challenges.
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