As the President and Chief Executive Officer of Optimum Energy Partners, Derrick May shares his expert insights into the evolving world of oil and gas investing. Despite global market shifts and the growing prominence of renewables, traditional energy sources continue to offer compelling opportunities when approached strategically. Drawing from his experience in financial analysis and portfolio management, he breaks down the latest trends, risks, and geopolitical influences shaping the energy sector. This article guides maneuvering market volatility, balancing short- and long-term investments, and positioning a portfolio in a transitioning energy landscape.
Introduction
Oil and gas are some of the most essential commodities in the world, and they fuel the modern world: oil and gas power our homes, make our cars move, let trains haul goods long distances, and more. They are especially important in developing countries with limited electricity and renewable energy access. Because of this importance, the energy market offers many lucrative investment opportunities.
However, the energy investment landscape is constantly in flux as a global market. Geopolitical conflicts, economic instability, new technology, and changing consumer demands all contribute to the market’s instability. Despite these uncertainties, Derrick knows how to adapt to energy market shifts: his financial analysis and portfolio management background have given him the experience to succeed in this market. He has not only survived market instability, but has come out ahead.
In this article, Derrick discusses how to analyze investing risks, trends, and opportunities in the oil and gas market.
The State of Oil and Gas Investments Today
The oil and gas market is at one of its most unpredictable phases in recent history. If one wants to invest wisely, it is essential that they understand the forces currently shaping the landscape.
Current market trends
Oil and gas prices were in flux in early 2025. On April 14th, oil forecasts adjusted downward, predicting higher output and lower demand. President Trump’s tariffs, along with Russia’s war on Ukraine, have destabilized the oil and gas market. Market stability is to some degree controlled by the oil producer group OPEC. Its primary goal is to regulate oil supply in order to maintain global market stability.
Impact of geopolitical events
Geopolitical events affect market volatility. Tariffs affect price and demand for energy market products, global emergencies disrupt supply chains, and wars often lead to sanctions that restrict oil trade and disrupt international supply routes.
The current geopolitical events include Russia’s war on Ukraine, US-China relations, and an intensifying trade war. Russia is dealing with oil sanctions, US-China relations are tense, and America’s tariffs have started a trade war. Despite the current energy market uncertainty, it will eventually settle down. In Derrick’s words- “I assure you that I have seen this all before.”
Role of oil and gas in the energy transition
Despite renewable energy’s rapid growth, the world still relies on oil and gas. Oil and gas use is more widespread than renewables, and will remain so for the foreseeable future.
Environmental, social, and governance (ESG) policies significantly impact the oil and gas market, as laws promoting renewable energy effectively reduce demand for fossil fuels while expanding the renewable sector. According to one source, investing in oil and gas fell 6.5% between 2016 and 2019, but with Donald Trump elected president, investment will likely rise; the US has pulled out of the Paris Agreement, and it is expected that Trump will sign executive orders promoting more oil and gas production.
Factors Influencing Oil and Gas Investments
A wide range of factors shapes the future of oil and gas. While some facets are driven by innovation, others are spearheaded by regulation or shifting global demand. Here are some elements that will help investors make informed decisions.
Technological Innovations
The oil and gas market seeks to clean up its emissions through carbon capture and storage technology. This technology captures CO2 released by burning oil and gas, separates it from the atmosphere, and then stores it in an inert form to prevent it from rejoining the atmosphere.
AI can also be used in the oil and gas industry. Derrick remains especially excited about this, as it is readily implementable in existing energy infrastructure. AI can optimize existing systems and monitor all aspects of the energy grid in real time. This reduces unnecessary CO2 emissions and helps detect problems before they develop.
Regulatory and Policy Factors
Environmental regulations directly affect the oil and gas market: environmental regulations almost exclusively limit fossil fuel emissions. Carbon taxes also dramatically affect the market, as the tax makes oil, gas, and coal more expensive.
Government incentives for cleaner energy investments are another problem for the oil and gas market, as investment in clean energy becomes more appealing than investing in oil and gas.
Market Demand and Energy Security
In general, global energy consumption grows every year; in the last decade, energy use grew 1.3% per year on average. In 2024, it grew 2.2%. China and India are the world’s leading energy consumers, and the US was a close third. Much of the global energy growth over the last decade has come from the developing world, and Derrick expects this trend to continue.
Oil and gas also play a role in national security. As they are the world’s most widely used energy sources, countries need a dependable oil and gas supply for their militaries, economies, and international trade leverage. Overreliance on oil and gas—or an insecure oil and gas supply chain—can severely handicap countries when their supplies dry up.
Investment Strategies for Oil and Gas in a Changing Market
In a rapidly changing oil and gas market, investors must carefully think through their decisions. In this section, Derrick has curated valuable investment strategies, approaches, and advice.
Short-Term vs. Long-Term Investment Approaches
In the oil and gas market, short-term and long-term investments work similarly to other investments: buy low, sell high. As commodities, oil and gas are subject to supply and demand, so keeping track of industry forecasts will give one an idea of what the market will look like in the coming months and years. Use these forecasts and other resources to help decide when to invest. Note that supply and demand don’t control oil and gas prices alone. OPEC influences the global oil market to maximize profit for its member countries.
Besides capitalizing on price fluctuations, one should plan for long-term energy diversification. The renewable energy market size is steadily increasing, and will continue to do so: diversifying a portfolio to include oil, gas, and renewable energy will ensure that at least one of the investments will pay off down the road.
Balancing Oil & Gas with Renewable Energy
Hybrid investment portfolios combining oil and gas with renewable energy offer strong long-term potential. While oil and gas currently deliver superior returns, including renewables, provides a hedge against potential fossil fuel price drops. The steadily expanding renewable market presents an opportunity for future growth, making early investment a strategic move for sustained profitability.
H3: Risk Management in Oil and Gas Investing
Oil and gas investing does come with some unique risks. In addition to being a fluctuating and often unpredictable commodity, oil and gas are subject to geopolitical and regulatory risks. War, trade wars, supply chain interruptions, and environmental regulations can all disrupt the oil and gas market. As a result, one should look into hedging strategies and portfolio diversification.
Since portfolio diversification has been discussed earlier in this article, here Derrick talks about hedging strategies, including futures contracts, options contracts, swaps, and fixed-price contracts.
Futures Contracts
A futures contract is an agreement to buy or sell energy on a future date at an agreed-upon price. Futures contracts lock in prices to prevent future losses.
Options Contracts
An options contract allows buying or selling energy at a set price within a timeframe. Options contracts protect against adverse market changes.
Swaps
Swaps involve trading financial obligations or cash flows based on commodity prices. They exchange one set of cash flows for another, where the market price is exchanged for a fixed price over a set period.
Fixed-Price Contracts
Fixed-price contracts are agreements with customers or suppliers that set energy prices for a certain amount of time. This agreement ensures price certainty for the agreed-upon length of time.
The Future of Oil and Gas
A global shift towards liquefied natural gas is noticeable. It is a transition away from fossil fuels to renewable energy. This shift is gaining momentum. J.P. Morgan predicts that the liquefied natural gas supply capacity will increase by 54% from 2024 to 2030.
The energy-transition process will last a long time, possibly decades or even generations, so liquefied natural gas will be an essential commodity for the foreseeable future. It will eventually take the place of the dirtier fossil fuels, and, eventually, oil and gas.
Sustainable fossil fuel technologies are being developed, and research efforts are already paying off. Hydrogen fuel is one such technology being developed, as is e-gasoline, a lab-made carbon-neutral fuel that works the same as regular gasoline.
In addition to new technology changing the energy market, institutional investors’ decisions shape what the energy market looks like. When institutional investors invest in a part of the energy market, their investments allow companies to develop and become bigger players.
Conclusion
The oil and gas investment landscape is evolving at every bend. Regulations, geopolitical conflicts, and market instability are reshaping the energy market. While investing, utilize Derrick May’s investment strategies to mitigate risk and ensure maximum returns. Keep in mind his thoughts about the state of the energy industry and how regulations and global events influence the oil and gas market. It is important to pay attention to economic trends and international events, and channelize them in investing practices. It is wise not to invest mindlessly- instead, there is a need to put a good strategy in place.
Frequently Asked Questions
What is renewable energy?
Renewable energy is energy made from replenishable resources.
What is the reason behind green fossil fuel technology not being widespread?
Technology that makes fossil fuels carbon-neutral is not widespread because of the difficulty of implementing renewable solutions on a global scale.
How does OPEC influence the oil market?
OPEC coordinates production levels among its member countries to decrease or increase oil and gas supply. This impacts the demand for oil and its price.
