Adipec Concludes: Energy Security, AI, and Supply Deals Dominate Discussions Amidst Global Disruptions

The critical themes of energy security, exacerbated by supply disruptions during the Iran war, and the increasing integration of Artificial Intelligence (AI) by oil companies to boost productivity were central to the discussions at Adipec, which concluded on Thursday. The four-day event saw significant participation from thousands of companies, with a strong presence from Asia.

Senior oil executives and energy ministers convened to address the pressing supply challenges affecting the global market. The Strait of Hormuz, a crucial artery for international oil trade, remains officially closed due to the ongoing Middle East war, now in its ninth month. Dr. Sultan Al Jaber, Minister of Industry and Advanced Technology and Group CEO of Adnoc, stated in his opening address on Monday that the Hormuz disruption has depleted global oil inventories by nearly one billion barrels. In some markets, diesel stocks have fallen to their lowest seasonal level in 35 years, and the liquefied natural gas supply gap has widened to 600 billion cubic feet. "Simply put, the world has eroded its supply buffers," Dr. Al Jaber remarked.

Logistical hurdles and disruptions to shipping activity have also driven up delivery costs. Dr. Al Jaber noted that logistics, which previously accounted for less than 5 per cent of a barrel's cost, now exceed 30 per cent. The number of ships transiting the Strait of Hormuz has drastically reduced from over 100 daily before the conflict began in late February, contributing to oil price surges and global inflation. The risk of transit remains high due to continued Iranian attacks on ships, with recent assaults by the Islamic Revolutionary Guard Corps resulting in two tankers and a ship catching fire.

Dr. Al Jaber further emphasized the necessity of developing new infrastructure for crude oil supply to global markets and ensuring the continuity of capital flows to finance trade. The UAE, having recently exited Opec, is making substantial investments in its energy infrastructure, including the construction of a new pipeline connecting Abu Dhabi with Fujairah on the east coast to circumvent the Strait of Hormuz and facilitate global supplies.

In a significant development, Adnoc signed a new agreement with OpenAI and Abu Dhabi's G42, positioning itself as the first energy company to deploy OpenAI's Frontier technology as it expands AI adoption across its operations. This initiative aims to integrate advanced AI capabilities into Adnoc's operations, fostering more connected decision-making in operational, investment, and commercial areas to enhance efficiency and productivity. OpenAI CEO Sam Altman commented on the integration, stating that AI should serve as a tool for people and that there should be no