According to the Secretary-General of OPEC+, Haitham Al Ghais, the demand for oil is expected to continue growing and remain resilient throughout the current year. OPEC+ is a coalition of 23 oil-exporting nations responsible for determining global crude oil supply levels. Al Ghais stated that they anticipate demand to increase by approximately 2.4 million barrels per day.
To support oil prices, Saudi Arabia recently announced its intention to reduce crude oil production by one million barrels per day. This move is significant, as Saudi Arabia and Russia, both major oil producers and members of OPEC+, collectively cutting production could result in a significant supply shortfall by the end of the year, as noted by the International Energy Agency (IEA).
Al Ghais emphasised that this production cut is a voluntary decision made by sovereign nations and is seen as a precautionary measure due to existing uncertainties.
Oil prices experienced substantial fluctuations in recent times. Following Russia’s invasion of Ukraine in February 2022, prices surged, reaching over $120 per barrel in June of that year. While prices retreated to slightly above $70 per barrel in May 2023, they have been on a steady rise again as producers attempt to limit output to stabilise the market. Brent crude, a key benchmark, surpassed $95 per barrel, raising concerns of a possible breach of $100 per barrel. This has prompted warnings of potential fuel price increases and prolonged inflation in major economies.
However, Al Ghais expressed more significant concerns about underinvestment in the oil sector. He argued that discontinuing investments in the oil industry could lead to volatility and supply shortages in the future. OPEC advocates for continued investments in both the oil sector and decarbonisation efforts, including alternative energy sources like renewables.
Regarding the potential impact of oil prices exceeding $100 per barrel on global inflation, Al Ghais emphasised the importance of taking a long-term perspective. He remained optimistic about global oil demand, with expectations of continued growth exceeding 2 million barrels per day in the coming year, though subject to uncertainties in the global market.
Looking ahead, Al Ghais stated that the oil industry would require nearly $14 trillion in investments by the year 2045 to meet energy demand, which is projected to increase by nearly 25% compared to current levels. He highlighted the importance of various forms of energy to meet these demands.
These comments were made ahead of a key meeting of industry leaders at the International Petroleum Exhibition and Conference (ADIPEC) in Abu Dhabi.
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