Latest news with #EdHirs
Argaam
2 days ago
- Business
- Argaam
Oil prices surge as Israel strikes Iran amid rising middle east tensions
Oil prices soared on Friday as tensions in the Middle East escalated after Israel launched airstrikes targeting several sites in Iran — a move that could threaten crude supply disruptions. Brent crude futures for August delivery jumped 8%, or $5.52, to $74.88 a barrel as of 7:56 am KSA time, trimming earlier gains after briefly reaching $78.50. Meanwhile, US West Texas Intermediate (WTI) crude futures for July delivery rose by 8.42%, or $5.73, to $73.73 a barrel, off earlier highs of $77.62. Israel said it had launched pre-emptive, precise strikes targeting Iran's nuclear program, citing increasing intelligence evidence that Tehran is nearing the capability to produce a nuclear weapon. The Israel Defense Forces (IDF) Spokesperson Effie Defrin said the attacks aim to thwart Iran's progress on this front. Ed Hirs, energy fellow at the University of Houston, told Yahoo Finance that the crisis could lead to a temporary slowdown in oil tanker traffic through the Strait of Hormuz — one of the world's most critical oil transit chokepoints, with up to 20 million barrels of oil passing through daily.
Reuters
27-01-2025
- Business
- Reuters
US power stocks plummet as DeepSeek raises data center demand doubts
NEW YORK/HOUSTON, Jan 27 (Reuters) - Shares of U.S. power, utility and natural gas companies sold off on Monday in some of the biggest recorded one-day drops, as new AI technology from Chinese start-up DeepSeek cast doubt on a projected surge in U.S. electricity demand and tech spending. Power producers were among the biggest winners in the S&P 500 last year on expectations of ballooning demand from the energy-guzzling data centers needed to scale Big Tech's artificial intelligence technologies. The wider adoption of AI models like the one developed by DeepSeek, which it says it built in under two months and is cheaper than models currently used by U.S. companies, could result in less electricity demand overall and result in a smaller power build-out, analysts and economists said. "If proven true, the efficiencies used within DeepSeek's open-source model can be applied by the hyperscalers to their models, which would result in a more moderated demand," analysts with Evercore ISI said in a note. Big Tech firms, which are also known as hyperscaling data center developers, have devoted tens of billions of dollars in AI data center development over the last year. In the U.S., data centers consumed roughly 4.4% of electricity in 2023 but are anticipated to use 6.7% to 12% of all power by 2028, according to a report produced by the Lawrence Berkeley National Laboratory. Independent power provider Constellation Energy (CEG.O), opens new tab, whose shares had shot up about 100% in 2024 largely on its ability to sell nuclear and gas-fired power to U.S. data centers, sunk by about 20% in trading on Monday after news of DeepSeek's advancements. Vistra (VST.N), opens new tab was down 30% and rival Talen Energy Corp (TLN.O), opens new tab was down 22%. DeepSeek AI could also threaten the dominance of current AI leaders, which are based in Silicon Valley, and slow their deployment of data centers. DeepSeek's AI assistance had overtaken U.S. rival ChatGPT in downloads from Apple's app store on Monday. But with the wider adoption of AI, even with more energy-efficient models, power demand could surge everywhere, said Ed Hirs, an energy economist at the University of Houston. He cautioned that a sell-off of power stocks could be short-sighted and short-lived. "In this instance, if DeepSeek turns out to be what everybody wants, and they sell to U.S. companies, and the U.S. companies change their algorithms to adopt to it, it just means a greater, faster broader development," Hirs said. Still, electricity companies, and even producers of feedstocks related to power generation, were under pressure. Earlier this month, Constellation acquired private natural gas producer Calpine Energy for $16.4 billion in one of the largest U.S. power industry deals ever, a sign of rising expectations that demand for gas will grow as a generation source for AI. Shares of publicly-traded producers of natural gas, which makes up the biggest share of fuels used to generate electricity in the United States, also slumped. EQT Corp (EQT.N), opens new tab was off 9%. Midstream operator Energy Transfer (ET.N), opens new tab, which said it has received connection requests from dozens of data centers, was down about 7%. here.
