Arab News | Speed over scale: How AI is redefining value in energy

RIYADH: On Monday, oil prices fell more than 7 percent as talks between Iranian and Qatari officials raised hopes of an end to the US-Israeli war with Iran, Reuters reported. By Tuesday, prices were climbing again.

Brent crude rose to $106.13 a barrel after the US struck Iran’s Qeshm Island, and a senior Iranian official told Reuters that the two sides remained far from a deal.

Moves this sharp, in a conflict that Reuters says has disrupted Middle East oil supplies for eight months, show why the energy industry is rethinking what makes a company valuable.

For decades, the answer was scale. The producers with the most volume, the leanest costs and the tightest control over their operations came out ahead.

Andrew Smart, senior managing director and EMEA energy lead at Accenture, told Arab News that this playbook is being rewritten.

“If you look back over time, the fundamental drivers of the industry were probably linked to volume and cost, integration, disciplined behaviours and organisational control,” Smart said.

He said those basics still matter, but the industry has moved towards a different set of priorities.

Three new drivers of value

Smart named three factors. The first is “structural optionality,” meaning a company’s ability to make different choices. The second is organisational agility, which he described as “the speed at which those choices can get made.” The third is product differentiation: how critical a product is, and how closely it is tied to key customers.

“These are three key factors that have really defined value creation over the last two to three years, and especially this year, given the issues the industry has faced,” he said.

This year has tested all three. According to Reuters, US officials described Monday’s strikes as defensive, meant to stop Iranian attacks on commercial ships in the Strait of Hormuz. When a route that important is at risk, being able to change course quickly becomes essential for producers and buyers across the Gulf and beyond.

Where AI fits in

Smart said executives across the industry keep asking the same question about artificial intelligence: what difference does it actually make for them?

His answer is that AI is “fundamental” to all three shifts.

“It puts the right data and decision-making information in the right hands at the right time, so you can make short-cycle moves that really create value,” he said.

In practice, decision-makers can act on current information instead of waiting for reports to move up the organisation. In a week when prices can drop sharply one day and recover part of the loss the next, that speed can decide whether a company captures value or misses it.

AI also connects the three factors. Faster decisions only help if a company has options to choose from, and options only help if the company can see which ones its customers value most. Better data serves both.

Beyond the short term

Smart said AI is not only about reacting faster. It also helps companies think further ahead.

“It also supports longer-term views, so you can examine scenarios, look at future options and make those critical choices, setting yourselves up for lower risk and greater flexibility in the future,” he said.

This is the core of his argument. The same technology that helps a trader respond to a market move this week can help a board test strategies for the next decade. Short-term agility and long-term resilience come from the same data.

For an industry built on long-cycle assets and multi-decade investments, that is a real change. Large projects still take years to plan and build, but the decisions around them no longer have to rest on one fixed view of the future.

The companies that win, Smart suggests, will be the ones that keep their options open and use AI to decide quickly which one to take.