Episode 3: Market Insights, a Conversation with Dave Ernsberger

Hello, my name's Andy Critchler. I'm Head of News at S&P Global Commodity Insights. And welcome to the Look Forward podcast from S&P Global. In today's rapidly shifting markets, success depends on anticipating what's next. The professionals who excel are those who can spot emerging trends before they fully materialize. The Look Forward podcast delivers exactly that. Insights to help you prepare for tomorrow's opportunities and challenges.

We bring you expert perspectives on macroeconomic trends, capital markets, energy transition, and global trade, with a sharp focus on what these developments mean for the decisions. that will shape your tomorrow. This podcast connects you with S&P Global's Look Forward Council, bringing cutting edge research on long-term trends and transformative market shifts. Together, we're committed to providing the forward-looking intelligence you need to navigate uncertainty with confidence.

Welcome everyone to the Look Forward podcast and joining us today for this episode in the heart of London where we're recording is Dave Ernstberger, co-president of S&P Global Commodity Insights and a man who has... Put an indelible mark, really, on the world of price reporting of commodities. Began your career in 1996, I believe. That's right. And really has reported... held senior leadership positions in the company through really a dramatic time in commodity markets.

And I was looking at where the oil price was in 1996. $9, I'm guessing. No, a little bit more. $22. But actually, if you adjust that for inflation... That's $45 in today's money. I really have been doing this a long time. If that's what inflation has done to the price of oil. Oh, my God. Yes. Well, if you work backwards, I think we're at $70 a barrel dated Brent at the moment. Yep.

That would be worth $34 a barrel in 1996. Interesting. But interestingly as well, 1996, there was another major technological... innovation that changed the world, just like AI is today and energy. I know we're going to talk about that a little bit. The invention of the printing press. The USB. Oh, okay. The USB stick. Very good. Which changed computers forever.

Dave, thank you for joining us. You were recently, and it's good that we started on oil and oil prices, because I know that you were recently at the OPEC International Seminar in Vienna, a kind of who's who of the global oil, gas, and energy industry. Coming at a very interesting time, of course, 2025 has been anything but dull. What was the mood, vibe that you picked up from fellow industry leaders that were attending?

So it's interesting we actually started the podcast with a little bit of a look back on 96, inflation, oil prices. I think the last time OPEC put an explicit price target in place was around 19... It was actually... 2001 2002 when it said it was looking for a price this is before your time yes uh they were looking to to stabilize the oil market within a range of 21 to 28 dollars a barrel which i'll always remember because you know back in

2001, 2002, that felt pretty bold, pretty ambitious to be thinking of $28. Of course, now we've been living in a world of 70. But to your point about inflation adjustment... where we are today is closer to 34 in those terms, right? So it's pretty interesting to think about that. And the reason I hearken back to that in answering your question is because...

At the international seminar in Vienna, it struck me that in my 30 years of looking at these markets, OPEC has rarely, if ever, been quite so successful. in delivering against its self-declared targets and its undeclared targets, in terms of...

You know, it's the goal of its actions in the oil markets especially. So OPEC has rarely, if ever, been this successful. And at the same time, at the event, I sensed that... OPEC is also simultaneously... at a kind of an unprecedented level of sensitivity around the conversation around what it's doing in the market and what its members are doing within the organization, both the members and the group.

countries that surround it through the plus structure. So OPEC is simultaneously very successful and very sensitive to commentary right now. And I was reflecting on that, you know, after Vienna and actually getting ready for this podcast, and I suspect what we're seeing is...

OPEC is both responding to the way the world is around it today. The line of demarcation has shifted from setting the scene for a discussion to trying to control a narrative. I think we're in an era of trying to control a narrative, and I think OPEC is responding. to that just like other organizations and governments and so on want to try and control a narrative instead of influence narrative let's say

which it needs to work through, I think, as an organization. What is its position really going to be around the discussion? Because if you're going to host a seminar with a lot of international delegates, you need to let them speak and see what they have to say and let the reporters report, right?

thing that strikes me about it is maybe the price of success is that you have to reevaluate your position in the world and I don't think OPEC has quite found peace yet with the fact that it now controls I think more than half of the crude oil production in the world, and therefore its relevance is at an all-time high, and it's going to attract an all-time high level of commentary.

So fascinating. Yeah, and it's not just the volume of crude on the water that OPEC now... has sort of direct policy influence over it's the broad spectrum of grades right you know it used to be just that medium sour very middle east focused bucket of crudes that uh the group used to control but now with the inclusion of russia open plus it's the full spectrum that we would look at

You know, OPEC has managed to bring back its oil production far, far faster than it said that it would and that the market thought it could. And it's done that without driving the price of oil down. In fact, oil is still around $70 in nominal terms as we speak today. And I dare say it will be.

for when people are listening to this podcast, if they listen reasonably soon anyways. So it's remarkable the success they've had in even bringing their own production back. And I think it's that diversity of grades and more nuanced understanding.

of the relationship between heavy and medium versus light that even the organization has so yeah I agree and I agree with you that It has been successful, especially if you look at it in the context of the current environment, because, you know, certainly from my experience as a journalist, I can't think of a...

three, four year period where we've had so much geopolitical risk. Sure. Where we've had major sea lanes virtually shut down to shipping, where we've had... you know tankers literally sunk on the water and if the group hadn't had that that spare capacity then you know where would oil prices be now add into that the trade policy uncertainty that we've seen this year

Yeah, and I'll say, Andy, just to kind of bookend that is we're not necessarily sitting here celebrating OPEC per se. I think we're just saying OPEC has a set of goals. It appears to be delivering very successfully against them, which is remarkable, actually. Yeah, yeah. But...

Coming back to this issue of volatility, what else do you think explains the way markets have been able to absorb these very volatile events, which normally, if I think back 20 years, it was... anything like this would have. Yeah, I think there are probably two other features of the oil markets today, and to some degree, natural gas, LNG, other commodity markets. But I think oil is the most advanced in terms of just length of experience, exposure.

to these sorts of issues and so on. One of the two other factors is that we've been through the pandemic, the post pandemic, the invasion of Ukraine, a number of... massive disturbances that have actually gotten the markets match fit. four disturbances. So the entire rewiring of trade flows, shipping and everything else around each of those events, actually, but especially the war in Ukraine most recently, you know, the turning of ships around, the reversing of trade flows and everything else.

the redirecting of cargoes from Russia to India, for example, it's kind of created an elasticity that's always been there to some degree, but maybe hasn't been fully fit and is now fully fit. So, you know, the market is just able to respond and react very quickly.

At one point, there were tankers queuing up to go through the Strait of Hormuz during the 12-day war, and yet the price of oil barely moved. And the beginning of the queuing up of ships might have induced a sort of a panic in other times, five years ago, 10 years ago, 15 years ago. Second factor we've been looking at is the world of risk management. The trading of futures and options is a lot more...

let's call it diverse and spread across geographies and locations and trader types. You know, 20 years ago, we had... NYMEX WTI and ICE Brent in terms of futures contracts related to physical markets. Now we have those two contracts plus INE in Shanghai, which has a lot of volume on it. GME in Dubai, IFAT in Abu Dhabi. And there are just...

And of course, there's Dubai futures themselves, which trade pretty actively. So there's a much greater array of tools for risk management that allow, you know, we were talking earlier about the diversity of grades of crude oil on the market. There's also a diversity of contracts in the futures market.

In the sense that physical and futures markets need to interrelate effectively to manage basis risk, location risk, and other kinds of risk, it's a much more sophisticated world in 2025 than it was in 2005.

It's a very good point, and I guess tied to that level of sophistication we see in the market now is data. You know, what I see... reporting on the market is the market's much more hungry for data and whether it's actual you know numbers produced by institutions tracking the market whether it's ourselves we track the market whether it's you know really interesting tools like commodities at sea maritime intelligence suite

used to track tankers on the water. The market and participants now, they have much more data that they can use to make an assessment. impactful do you think that that is in terms of yeah it's actually thinking about what you're saying there i think that could be having a pretty big effect on dampening volatility as well because i grew up in a world of buy the rumor sell the fact yeah that was always the cliche among the trading community

I've never traded anything as a reporter, but you would talk to people about what was going on with PriceVault. They'd say, well, you're buying the rumor, and then you're selling the fact, right? Well, in a world where everybody knows everything instantaneously, Where's the rumor? There's no space for a rumor, right? It's pretty much, I mean, I'm not suggesting we're living in a world where we're overwhelmed by facts.

either, but we certainly have plenty of data, to your point, right? So we knew exactly how many ships were queuing up, how long they'd been queued for, how fast they were moving, right? And you wouldn't have known that 20 years ago. There would have been a lot of scuttlebutt going on around Wichita.

tankers were doing what, and it'd be a lot of word of mouth happening. So yeah, maybe the vast availability of data and the AI enhanced methods for parsing that data might be also kind of weirdly in some way. ways, leveling off that volatility as well. Now, you talked a little bit about this several weeks, which you were at at the beginning of the year. Major...

energy convention for S&P Global in Houston, brings together global leaders again from oil, gas, energy, commodities. And he highlighted this convergence of big tech and big energy. I wanted to kind of ask you how you see AI reshaping, really, the world that we work in. Yeah. CIRA Week is a massive opportunity for...

different kinds of leaders to get together and have conversations that are in the moment. And this year, as you rightly say, was another great example of that. What struck me as being... pretty wild and pretty new was we had big tech in the room at Sierra Week, senior leaders from big tech, making demands of big energy. And I'm not sure that oil and gas suppliers power you. utilities, transmission operators.

have ever really faced off against these kinds of leaders before. Because, you know, where it was then was big tech wants answers now. And energy was like, well, you know, we'll start working on it. And big tech was like, that's not fast enough. You know, we want to build our data. centers now. There's an AI arms race going on with China right now. We need energy dominance in the U.S. to deliver against that. Of course, Syria being in Houston is kind of the home of a U.S., in a way, a U.S.

centric conversation, even though it's very internationally attended. In the time since then, two pretty interesting things have happened to my mind. Number one is that the builders of the data centers have begun to... solve those problems for themselves. So they've begun to talk about, of course, ways to deliver AI more efficiently. Since then, we saw the DeepSeek thing happen. We saw more efficient ways of delivering AI. And the other thing that's happened is they've started to look more...

internationally at what other solutions could be. Will they build data centers elsewhere? Will they go to more conducive environments for investment in infrastructure? So the conversation has evolved and evolved, and it will evolve again.

diversifying itself internationally. And of course, doing what markets always do, which is if there's not supply, find a way to economize demand. And I think it's pretty interesting because over the next two or three years, there's some big decisions to get made about where will people build. power supply? Where would they build electricity production?

to some degree, transmission expansion. And then what timeline will that be delivered on and will the demand still be there when it arrives? We're either going to live in a world of perfectly delivered billion-dollar investments or problematically delivered stranded investments.

And I think that's pretty interesting to see. Because the countries that control the commodities and the energy at the moment, it's interesting that they are some of the biggest investors in this AI technology. And it's not just through... their sovereign wealth funds, it's actually...

we want the data centers in our country. So you look at Abu Dhabi, you're investing heavily in this. That's right. So that's kind of where that international diversification tends to come from is I think the countries that have the available power supply are saying, build your data centers here.

And in a world of tariffs and the trade negotiations that the U.S. is leading right now, that creates a new environment for the tech companies to be thinking about as well. Do they really want to do that or not, right? There's a political aspect to that question, I think.

Yeah, I mean, I've read this comparison between the petrodollar states declining and the rise of the electrodollar states. Electrodollar, okay. I think it's far more nuanced. I think the petrodollar states want a bit of that electro pie still. That sounds like a dangerous thing to be eating. Yeah, yeah, yeah, yeah. You might get burned. I mean, it brings us as well to this subject of energy transition, which, you know, I remember, I think, four years back at Sarah Week.

everyone wanted to talk about energy transition. And then the following year, it just kind of flipped. And all the old companies and a lot of the energy companies there really started to... change the narrative around well where does the energy come from long term energy security of course and that you know the conversation is more nuanced around climate change and and

and mitigating the release of carbon. Where do you see that going? So I think in 2026 and beyond, we will move beyond the energy transition conversation and into the... next phase of energy expansion. And this is where the nuance we're talking about becomes really important. I think the investments will continue to flow into ways to generate electricity that are fairly novel, at least in historic terms.

So wind, solar, other sort of forms of renewable energy will be the centerpiece of energy expansion. This world of transition that we've been talking about for the last, let's call it five years, certainly, 10 years, possibly, is kind of coming to an end. And the problem with the transition concept is it sort of suggests you're shutting down one thing and starting up another.

What has become very clear in the last couple of years is that to meet the demand for energy in the world over the next 15 years, we're going to need all of that. Actually, we're going to need all of the core energy we have today. We're going to need all of the oil, the natural gas, especially the nuclear. And we're going to need to...

build on top of that these alternative forms of energy so it's all about expanding energy as opposed to transitioning from one kind of energy to another and I think as that idea catches on that will drive I think you know rewarding in terms of

financial reward, ROI, investments into expansions in energy technologies and some of the spaces that need them the most as well. So I think we're going to get a slightly different kind of balanced conversation around that. And in that world, you know, growth and demand for hydrocarbon.

will be slower, but it will be there. And the growth in demand for non-hydrocarbon energy will be faster, and that's going to be the focus of investment to some degree. Energy evolution replaces energy transition, really. Yeah, evolution and expansion, I think. That said, we're doing some interesting things at S&P Global in this space of energy transition still, and especially in carbon, which is the key issue around climate change and reversing global warming.

You've championed the development of carbon accounted pricing and registry infrastructure. Where do you see that going? Where do you see it evolving as a key part of the kind of mechanics? of how the commodities world works. So one of the most important attributes of the carbon markets, both the compliance carbon markets and the voluntary carbon markets, and here we're talking about the market where you generate certificates for or abating or removing carbon from production supply chains.

is that it helps bring the global effort together to mitigate the carbon impact of energy on the world. And higher, more difficult-to-abate industries, cement production is a classic example. There are others out there. there have an opportunity to offset or account for what they're doing by buying credits from areas that are making deliverable efforts to remove carbon or abate carbon. So the economic premise is...

really important because it creates a global dynamic trading environment to move capital around, get it from where it is to where it needs to be, to advance efforts to decarbonize and abate carbon. So that premise is important. That's why we've been working really hard at S&P Global and in Commodity Insights around carbon accounting for cargoes of LNG and crude oil, for that matter, aluminum and other products in the marketplace in different supply chains and registries for storing.

carbon credits, and assessing the value of these credits in the marketplace. These are things we've been working on very hard for 15 years in the case of the registry, six years in the case of the markets themselves. And where we are today is, you know... There's a clear, very strong desire to take the learnings from the last 10 years in these very, very new markets that have a viable and important economic reason to exist.

but do not yet have not demonstrated, at least, the transparency, the credibility. and the confidence that the markets need to develop and grow further. So there's an opportunity here to be clearer and more vigilant, both in the market in general.

and the people who participate in those markets around what the meanings are of these certificates, what the values are of these certificates, and for the way that they're traded, well, actually produced, traded, and retired to withstand the highest levels of public scrutiny. And that's kind of where...

we're at. And what's interesting about carbon markets to me, as someone who's been in this for a while, is when you see a new market emerge, it always goes through a kind of an initial flourishing and excitement. Then you see some cracks in how it's designed, and it needs to go through a reformation of sorts.

And that's where carbon markets are today. And it adds that tangible element to it. I think that where carbon markets and the climate change debate has suffered in the broader general medium with a broader general population.

outside financial markets and commodities trading is it's difficult to you can't go out and buy it you can't go and buy a ton of carbon you can't go well you can in markets but yeah in some in some markets you can and then you can try to make fibers from them and stuff but the more typical way to trade them is We're actually adding that. We're making it tangible. And I think that's a really important thing going forward. I think there's a long way to go with carbon markets.

With the Platts benchmarks, for example, we've done this in oil and natural gas. We've done this in LPG. We've done this in chemicals. And we'll do it in carbon, too, in terms of working with the industry to help define standards, practices. ways of trading, you know, accepted ways of valuing. And that's what makes it exciting for this generation of price reporters. Absolutely. First take. S&P Global Commodity Insights launched this.

the beginning of this year instant messenger delivered instant analysis coming back to what we discussed earlier in the podcast around The growing importance of data is not just that that markets are looking for and market participants are looking for. It's this context. What does it mean?

Do you see more opportunities in being quicker in delivering that kind of analysis at speed? Yeah, I think so. I mean, I think what our customers... prize more highly than anything because our customers tend to be living and operating in a very dynamic real-time environment is the minimizing of the time between event happening

and credible authoritative source giving an input as to what it means. And even in 2025, when most of our customers have incredibly advanced AI solutions of their own, good analytical teams of their own, A third-party perspective on what something means is really important even now.

And what I've heard from talking to people in the industry and the market is they value what Commodity Insights has to say. They want to hear from our researchers and our analysts. They want to hear from the price reporters and many more beyond that. But they want to know now. We live in a TikTok generation. We live in an Instagram generation. The traders that are coming up now grew up in a world of real-time social media, right? So we have to evolve the way we're telling people.

what we think things mean, to respond to the appetite for two things, speed and brevity. Like people don't have an attention span to read a... 1200 word evaluation of something three days after it happened. By then they've also been traded 17 times, right? So, and there's still a space for that.

for certain groups of people in strategy and elsewhere. But people want to know now, and they want to know quickly what something means. And it's that mobility issue, you know, the mobile device. You know, we certainly haven't reached saturation points in terms of... markets, participants, traders, our kind of customers that they want that information via... Yeah.

What I love about that, Andy, is we're also putting the onus on our own experts within our own business to be responsive to something happening. Just like our customers, our experts don't really have the time to pontificate and reflect too much. They should reflect before they put anything out in the market. But, you know, they need to move with time, right?

Reporters and researchers and analysts also have become more aware that it is probably okay to think about what something means, get input from people, but then speak into a camera and say what it means. Of course.

To finish... You know, as a journalist, normally you ask the question, you know, what's the big worry? What's the big fear for the rest of this year? I'm going to flip that on its head. I'm going to ask you, Dave, you know, what are you optimistic about? the remainder of the year, both, you know, in terms of the business, but also in terms of commodities and the markets that we cover? I am incredibly optimistic that we have been through historically high levels of uncertainty. And yet...

the commodity markets have not burned out themselves or burned out the global economy. And when I look forward from here and I see, to take a bunch of random examples, Let's say the de-escalation of the Israel-Iran conflict, the beginning of the establishment of trade deals between the U.S. administration. The EU just got inked in the last couple of days. There'll be more to come for sure. UK was done a while ago now. That as we move out.

of this historic period of uncertainty. And now I'm saying uncertainty, not volatility, right? And into what will, by definition, be greater certainty. I think that the economy that we serve, the industry as a whole, and even our own business, will have... learned a lot, and will be more confident to move forward on some of the trajectories that were in place a year ago, but move forward with more acceleration and more force.

I think the first six months of 2025 stress tested a whole bunch of hypotheses. Some of them have been put by the side, but most of them carry on. The world has proved... proven to be far more resilient than I think probably any of us thought. Yeah, that's right. And I think that's great cause for optimism. Yeah, absolutely.

A great note to end today's podcast on. Thank you so much, Dave, for joining us. It's been an absolute pleasure. And tune in again for our next episode. Thank you, Andy. Thank you.