Good morning, here's what the Oilman has for you today:

• Red Sea Troubles Push U.S. Oil Exports Higher

• Activist Investors Set to Drop ESG Campaigns

• Upcoming Oil and Gas Events

• Tweet of the Day

Red Sea Troubles Push U.S. Oil Exports Higher

Ship attacks in the Red Sea have helped push U.S. oil exports higher.

Traders are betting on relatively cheap cargo from the Gulf of Mexico.

Especially if they’re from Europe.

Safer shipments

In fairness, the Houthis have not attacked oil tankers. Yet.

Some traders are nevertheless rerouting their Middle Eastern cargos around Africa.

And others, especially European ones are not waiting around.

The journey around Africa takes almost two weeks longer, making the cargo more expensive.

In comparison, U.S. crude is a bargain – delivered more quickly.

So, even if no tankers are being attacked, oil buyers are switching suppliers.

And that’s pushed U.S. exports higher by close to 1.4 million bpd, as of end-2023.

Now, they’re climbing closer to 6 million bpd.

A stable trend?

The Houthis are not signaling they plan to stop firing missiles at ships in the Red Sea.

Stepped-up U.S. military presence has so far not made a difference.

And Israel doesn’t seem to have plans to stop bombing Gaza—which is what the Houthis want.

So, chances are cargo diversion from the Red Sea will continue.

Which means the supply reshuffle will continue, too.

And U.S. oil exports will rise further.

In fact, they might break the previous record if the situation doesn’t change.

Kind of ironic for OPEC’s Middle Eastern leaders.

They’re losing oil trade to their biggest rival.

Because their waters are too dangerous.

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Activist Investors Set to Drop ESG Campaigns

Activist investors are set to support a lot fewer ESG campaigns this year.

Those have proved to drive much lower returns than other shareholder initiatives.

A totally unexpected discovery.

Truth in numbers

Consultancy Alvarez & Marsal studied 550 shareholder campaigns between 2016 and 2021.

They found operational and strategic campaigns outperformed the market at a rate of 9.4%.

And ESG campaigns? They did a lot worse: outperformance was at just 0.2%.

Lower market outperformance means lower returns, in case anyone needs it spelled out.

Investors are focusing more on returns this year, A&M said.

So, the firm expects “a renewed focus on metrics such as margin growth, cash generation, and return on capital.”

Caring for sustainability is all fun and games until you lose money.

A growing trend

ESG investing is falling out of favor, not just at AGMs.

Sustainable-labeled investment funds saw net outflows last year.

That no doubt had to do with the wind and solar stock route.

But it may have also had something to do with returns.

Those same returns that make fund managers include oil and gas stocks in their sustainable funds.

Just to make sure they do make some money for investors.

Subsidies can’t do that.

Oil and gas profits driven by strong demand can.

Upcoming Oil & Gas Events

• January 16: TIPRO/IPAA Leaders in Industry Luncheon, Petroleum Club of Houston, Houston, TX

• January 17: IPAA Private Capital Conference, The Post Oak at Uptown Houston, Houston, TX

• January 17: Petroleum Alliance of Oklahoma, Wildcatters Wednesday Luncheon, Oklahoma City, OK

• January 17-18: GO-WV Winter Meeting, Marriott Town Center Hotel, Charleston, WV

• January 18: Kansas Oil and Gas Day Legislative Reception, Kansas State Capital, Topeka, KS

• January 23-25: POWERGEN International, Ernest N. Morial Convention Center, New Orleans

• January 30- February 1: Onshore Wellsite Automation Congress, Houston, TX

Around the Global Patch

🇮🇷 Iran retaliates and seizes U.S. tanker.
🇨🇺 Cubans brace as fuel prices skyrocket.
🇷🇺 Russia reveals triumph in seaborne oil shipments.

Tweet of the Day

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