1. Exxon’s sharp CAPEX cuts
– ExxonMobil (NYSE: XOM) announced plans to cut its CAPEX down to $20-$25 billion annually, lopping off $10 billion from what the company said in March at the onset of the pandemic.
– In terms of spending growth, the new outlook amounts to a contraction next year and a very modest increase in spending thereafter.
– The spending plan amounts to a new strategy for the oil major, which had been stubbornly sticking to aggressive growth plans despite strategy overhauls taking place at some of its top competitors.
– Spending across seven large independent oil companies and six national oil companies will drop by $23.8 billion this year and by another $6.77 billion next year, according to Bloomberg.
– Translating those cuts to production levels, output could be 9 mb/d lower in 2025 than otherwise would have been the case.
2. Peak in ICE vehicles already reached?
– The possibility that the world has passed peak oil demand has become a mainstream argument, even if it isn’t the consensus. Among others, BP (NYSE: BP) argues that we are past the peak.
– One of the main reasons is that we are already likely passed the peak for the internal-combustion engine.
– Car sales fell sharply this year, but sales of EVs held up better. Volkswagen and Daimler each saw record declines in auto sales, but their EV sales doubled.
– Next year, automakers will release 35 new all-electric models.