In today’s Money Morning…BP isn’t the only one ditching Russian oil and gas…battery beneficiaries…going nuclear for good…and more…
With no end in sight for the conflict in Ukraine, questions over the future of global energy markets remain in flux.
On the one hand, we’re seeing much of the West boycott Russia’s oil and gas. Most of which is being self-imposed rather than due to any effect from sanctions.
I’ve mentioned before how BP, for example, has decided to sell its Russian assets. The oil major has seemingly used this war as an easy way to exit the sector. It’s an interesting move that could lend a lot of credence to their recent musings about greener energy solutions.
Either way, though, BP isn’t the only one ditching Russian oil and gas.
Vitol — the world’s biggest oil merchant — has stated that it too plans to abandon Russia.
The wind down will begin within a matter of months, and they will cease trade altogether by the end of the year. It’s a dramatic turn of events for a company that relies so heavily on these assets.
In the short term, this will obviously wreak havoc on oil prices. We’re already seeing that unfold before our eyes right now.
What I believe investors should be far more interested in, though, is the long-term ramifications.
Because as I’ve alluded to before, we’re seeing one of the biggest disruptions to energy markets ever…
As Selva detailed yesterday, battery metals and battery solutions in general are still running hot.
Investors have been piling into this sector in the past 12 months. This includes many of the key materials like lithium, nickel, cobalt, and more.
But as Selva pointed out, once we start seeing automakers and other big firms pour capital into mining and production of these minerals, things could really kick off. That’s an important distinction for not only investors like yourself, but also energy markets.
Expect to see some of the big names in energy — like BP, Shell, and ExxonMobil — all begin to ramp up their involvement in this space.
It seems fairly obvious that these big businesses are looking to hedge their bets on both sides of the energy debate.
And with Russian oil becoming untradeable in the eyes of the West, investment in new solutions will be required. Otherwise, Europe, in particular, will face some serious challenges in energy security to come.
Indeed, as we’ve seen this week, the EU is already putting in place emergency measures.
The establishment of the new ‘EU Energy Purchase Platform’ is just one example:
‘In order to secure the EU’s energy supply at affordable prices in the current geopolitical context and to phase out dependency on Russian gas, the European Commission has established with the Member States an EU Platform for the common purchase of gas, LNG and hydrogen.’
Again, though, this is a stop-gap solution, in my view. The big changes are going to happen over the coming years and decades…
Going nuclear for good
I’ve said it before, and I’ll say it again: nuclear power seems like the best possible option for Europe right now.
France has already proved just how effective and reliable this energy source can be. Not only providing them with enough power for all who need it, but also enough to become a major energy exporter.
The UK has clearly grasped the situation. Boris Johnson came out late last week with a pledge to build eight new nuclear plants to reduce his nation’s reliance on energy imports.
By 2030, Johnson hopes to turn the UK into a cleaner and greener energy producer. And in doing so, he might just be able to ensure that Britain never needs to source its energy from elsewhere ever again.
For a lot of Australians, though, it’s a topic that few want anything to do with. This is even though we have an entire sector that could be a big beneficiary in all this change.
To quote myself:
‘You can hardly even talk about the idea of nuclear power in this country, let alone propose it as an energy alternative. It is viewed as something incredibly evil that would destroy us.
‘Despite that, though, we’re also one of the biggest miners of uranium — digging up the key material that is required to power nuclear fission reactors.
‘So with that in mind, I think investors should seriously be looking into some of the uranium stocks across the ASX. Because if Europe really does commit to nuclear — which is estimated to require $790.6 billion in investment by 2050 — then local uranium miners could enjoy some big gains in years to come.’
The tides are continuing to turn — and while oil and gas aren’t going away, new energy solutions are becoming increasingly necessary. That’s why investors like yourself need to keep an eye on battery metals, nuclear developments, and much, much more.
Editor, Money Morning
Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks. For information on how to subscribe and see what Ryan’s telling subscribers right now, click here.