How Will COP26 Affect Oil?

Over the past few days, legions of global leaders and climate change advocates have descended on Glasgow for the 2021 United Nations Climate Change Conference. Known as COP26, the 26^th edition of the summit is set to have big implications for the international oil market.

Biden takes a cautious approach to cutting oil production

Despite oil and gas production being directly linked to climate change, many leaders stress that an embargo isn’t the answer and could be damaging to communities around the world. In fact, ahead of the COP26 summit, US President Biden urged OPEC+ members to pump more oil to meet global demand and push down prices.

"On the surface it seems like an irony," said Biden, referring to the goal of simultaneously addressing climate change and continuing to pump oil. "But the truth of the matter is... everyone knows that idea that we're going to be able to move to renewable energy overnight... it's just not rational.”

OPEC+ decisions to push up oil prices  

The call to boost oil production is part of Biden’s plan to reduce fuel prices, with American gasoline recently hitting a multiyear high of US$3.70 per gallon. His push to increase production was met with resistance from OPEC+, with the cartel asserting the COVID-19 pandemic is still having a negative impact on demand. Unless OPEC+ agrees to increase oil production, analysts predict prices will continue to climb towards the US$85 per barrel mark. If the cartel continues to limit production, analysts predict prices of U$120 per barrel by June 2022.

Canada set to cap oil and gas emissions

Canadian prime minister Justin Trudeau was one of many global leaders to attend the COP26 summit. In a speech, he pledged to cap oil and gas emissions, admitting that it’s “no small task for a major oil and gas producing country.” If Canada does deliver on its promises to cap emissions, it could slash global oil supply and contriute to higher prices across the board. 

David Attenborough petitions for change

British hero Sir David Attenborough opened COP26 with a bang, urging leaders to "turn tragedy into triumph" in a speech made to delegates. "Our burning of fossil fuels, our destruction of nature, our approach to industry, construction and learning, are releasing carbon into the atmosphere at an unprecedented pace and scale," said the famous naturalist. "We are already in trouble."

To combat climate change, he urged the world to work together and save the planet. "If working apart we are a force powerful to destabilise our planet, surely working together we are powerful enough to save it," he said, before concluding, "In my lifetime I've witnessed a terrible decline. In yours, you could and should witness a wonderful recovery."

As countries around the world commit to climate change targets, the market for sustainable fuels will continue to boom. Find out more about how the advent of eco-friendly fuels will impact airlines in ‘Recent Advances in the Sustainable Aviation Industry.’