Skip to main content
Commentary Cleaner Energy

Better out of it: the price of oil politics

DSC08197
iStock oil refinery Sept monthly 2019

In January 2017 Mikhail Gorbachev wrote an article for Time magazine. In it, the former head of Soviet Union painted a bleak picture. “It all looks as if the world is preparing for war” he said.1

Unfortunately, it is not hard to agree with him, even two and a half years later. Relations between the major global powers are tense. Many countries have despotic rulers. Divisive and nationalistic rhetoric abounds. And there are many potential flashpoints as regional conflicts play out.

One of the flashpoints ignited in September. On the 14th of the month, drones attacked two oil processing facilities in Saudi Arabia.   Responsibility for the attacks almost certainly lies with Iran, Saudi Arabia’s fierce regional rival.

One of the sites attacked, Abqaiq, is particularly important. It is the largest crude oil stabilization plant in the world.2 It processes more than 7 million barrels of oil per day – that’s about 7% of global production.  The facilities had to be shut down, cutting Saudi oil production in half.

Oil prices leapt when markets opened on Monday 16th. At one point they were up as much as 20%.3 That’s the largest intraday move since Iraq invaded Kuwait almost 30 years ago.

2019 has been a volatile year for oil prices. Iran was under economic sanctions before the attack. Other political conflicts, such as in Venezuela and Russia, have already reduced global supply.

Energy hungry developed nations have few options to deal with these supply issues. They can try to broaden the sources of supply. This has often involved exploiting pristine wildernesses such as Alaska, or deep-water oceans. More recently, developments in shale oil extraction in North America have provided extra barrels. But this extraction is energy intensive, and creates soil, air and water pollution.

The other option is to stay close to energy exporting nations. This means being drawn into the regional conflicts that result in attacks like Abqaiq. It also means ignoring human and civil rights abuses in those countries. Saudi Arabia itself is the highest profile example. Despite recent advances,4 its stances on women’s rights and criminal justice are a long way from those of its oil customers.

At last an alternative is now in view. The relentless advances in clean technology of the last 20 years are changing the arithmetic.

Road transport currently accounts for more than 40% of global oil demand.   Battery electric vehicles are already replacing internal combustion engines in light passenger vehicles.   Renewable energy to power the cars can be generated and used within a country’s borders.

A recent forecast by Bloomberg New Energy Finance suggests that global demand for transport fuel could peak in 2030.5 It is even possible that demand will peak before then.

This is not lost on the oil industry. Saudi Arabia is already preparing for this new world. The recent softening of some of its social policies is likely to be part of this. Its plan to list its national oil company, Saudi Aramco, is also part of the plan. Attracting foreign investors into Aramco would help bind Saudi Arabia to its international customers and sponsors. It might also be better to realise the value in Aramco now, than wait for oil demand to peak.

Our strategy invests in the transition away from fossil fuels. Cleaner Energy stocks like TPI Composites help provide renewable wind energy. Sustainable Transport stocks like Hella, Norma and Aptiv provide the engineering for electric vehicles.

This transition is a critical part of the battle against climate change. It seems likely that it will also help reduce the risk of global conflict, and fundamentally change the relationship between petro-states and their customers. If so, so much the better.

1 https://time.com/4645442/gorbachev-putin-trump/

2 https://en.wikipedia.org/wiki/2019_Abqaiq80%93Khurais_attack

3 https://www.economist.com/graphic-detail/2019/09/16/the-drone-strikes-in-saudi-arabia-spook-oil-markets

4 https://en.wikipedia.org/wiki/Women%27s_rights_in_Saudi_Arabia

5 https://about.bnef.com/blog/three-drivers-curbing-oil-demand-road-transport/

Foresight Group LLP completed an acquisition of the trade and assets of WHEB Asset Management LLP (WHEB). By way of Novation, Foresight Group LLP now acts as investment manager. Foresight Group LLP uses the trading names WHEB and WHEB Asset Management.

Foresight Group LLP and is authorised and regulated by the Financial Conduct Authority with Firm Reference Number 198020 and has its registered office at The Shard, 32 London Bridge Street, London, SE1 9SG. FundRock Partners Limited (formerly Fund Partners Limited) remains the Authorised Corporate Director of the Funds and is authorised and regulated by the Financial Conduct Authority with Firm Reference Number 469278 and has its registered office at Hamilton Centre, Rodney Way, Chelmsford, England, CM1 3BY.

Important Notices:

The price of shares (“Shares”) in FP WHEB Sustainability Impact Fund, WHEB Sustainable Impact Fund or WHEB Environmental Impact Fund may increase or decrease and you may not get back the amount originally invested, for reasons including adverse market and foreign exchange rate movements. Past performance does not predict future returns. Any performance shown does not take account of any commissions and costs charged when subscribing to and redeeming shares. The Fund invests in equities and is exposed to price fluctuations in the equity markets and focuses on investments in mid-sized companies in certain sectors so its performance may not correlate closely with the MSCI World Index (the benchmark). For full risks, please see fund prospectus on www.whebgroup.com. This information is issued by Foresight Group LLP. We have exercised reasonable care in preparing this information including using reliable sources. However, we make no representation or warranty relating to its accuracy, reliability or completeness or whether any future event may or may not occur. The information (including the MSCI information) is intended for information purposes only and does not constitute or form part of any offer or invitation to buy or sell any security. Any opinions constitute our judgment as of the date published and are subject to change without notice. We do not offer legal, tax, financial or investment advice. The information should not be relied upon to make an investment decision. Any such investment decision should be made only on the basis of the Fund scheme documents and appropriate professional advice.

WHEB Environmental Impact Fund

The Manager of the Fund is FundRock Management Company S.A., authorised and regulated by the Luxembourg regulator to act as UCITS management company and has its registered office at 33, rue de Gasperich, L-5826 Hesperange, Grand-Duchy of Luxembourg. The Fund is registered for distribution to professional investors in the United Kingdom. It is not available to investors domiciled in the United States.

FP WHEB Sustainability Impact Fund

FundRock Partners Limited is the Authorised Corporate Director of the Fund and is authorised and regulated by the Financial Conduct Authority with Firm Reference Number 469278 and has its registered office at 6th Floor Bastion House, 140 London Wall, London, EC2Y 5DN. The state of the origin of the Fund is England and Wales.

WHEB Sustainable Impact Fund

The Manager of the Fund is FundRock Management Company S.A., authorised and regulated by the Luxembourg regulator to act as UCITS management company and has its registered office at 33, rue de Gasperich, L-5826 Hesperange, Grand-Duchy of Luxembourg. The state of the origin of the Fund is Ireland. The Fund is registered for distribution to professional investors in Austria, France, Germany, Italy, Luxembourg, Norway, Singapore, Sweden and the United Kingdom, and is registered for offering to retail investors in Switzerland, Denmark and the Netherlands. The Fund is also available for professional investors in Belgium and Hong Kong. It is not available to investors domiciled in the United States.

For FP WHEB Sustainability Impact Fund and WHEB Sustainable Impact Fund, the Representative in Switzerland is ACOLIN Fund Services AG, Leutschenbachstrasse 50, CH-8050 Zurich, whilst the Paying Agent is NPB Neue Privat Bank AG, Limmatquai 1/am Bellevue, P.O. Box, 8024 Zurich.  The relevant documents such as the prospectus, the key investor information document (KIIDs), the Articles of Association as well as the annual and semi-annual reports may be obtained free of charge from the representative in Switzerland.

The MSCI information may be used for your internal use, may not be reproduced or re-dissseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages (www.msci.com).

Join our mailing list

Sign up below for regular email updates about our funds, our impact, our events.
{{ errors[0] }}
{{ errors[0] }}
{{ errors[0] }}
{{ errors[0] }}
{{ errors[0] }}
{{ errors[0] }}
WHEB is now a part of Foresight Group.
Authorised and regulated by the Financial Conduct Authority
Copyright 2025© WHEB. All rights reserved Made by Thursday