Oil: Will Recent ExxonMobil Board Changes Impact Future Oil Prices?

An activist investor was able to get three board members voted onto ExxonMobil's Board of Directors. This is seen as a victory for the pro-climate advocates. Yet, could this victory indicate that an oil crisis is coming in the next few years? In one of my first blog posts back in 2017, I pointed out that a lack of investment in exploration could impact oil supply while demand was still growing. I've come back to this basic argument every so often since 2017. One such blog post was this past February when I had this quote from the IEA:

What does this mean for future supply-demand balances and for energy transitions? Already, the decline in investment in 2020 takes an estimated 2.1 mb/d away from anticipated oil supply in 2025, and some 60 billion cubic metres (bcm) off natural gas output. However, if investment were to stay at at 2020 levels for the next five years then this would reduce the previously-expected level of oil supply in 2025 by almost 9 mb/d, and bring down natural gas output in that year by some 240 bcm.

Could this victory by an activist investor result in ExxonMobil contributing to a continued deficit in oil investments? It should be noted that ExxonMobil has 12 board members so how much influence these three new members will have is debatable, but they could have impacts on the margins when it comes to investment decisions.

And the IEA recently stated that they believe that oil demand will reach pre-COVID-19 highs much sooner than anticipated.

Bloomberg (Jun 1) reported on this topic:

“Demand in one year or so may well come back to the levels of before the crisis,” IEA Executive Director Fatih Birol said in a Bloomberg Television interview. There’s a “strong” recovery in progress in the U.S., China and Europe.

It’s a slight shift from the most recent outlook from the organization, which advises major economies. In a medium-term report published in March, the Paris-based agency said that consumption wouldn’t recover to pre-crisis levels until 2023.

. . . The IEA estimated in a report last month that demand has revived to about 94% of prior levels, remaining depleted by the lack of air travel. It warned then that the outlook for consumption remained “fragile.”

Based on this, the only thing holding back oil demand from reaching all time highs is air travel. With all the talk I hear about work-from-home in the United States, the IEA is stating that the only thing holding us back from reaching previous highs in oil demand is air travel.

Bloomberg is saying that this change in forecast that we could get back to previous oil demand levels is only a slight shift. I'm not sure about that. The IEA is now saying over the next 12 months, which would be June 2022. This compares to a previous forecast that we would get to those levels by 2023. That seems to me to be at least a 6 month shift. I'm not sure of that is a "slight shift" especially when we're talking about just a 1 to 2 year forecast.