The Secretary General of Opec+, Haitham Al Ghais, anticipates that the price of oil will remain high due to increasing energy demand. Opec+ is a consortium of 23 oil-exporting nations that determines global crude oil supply. Al Ghais informed the BBC that they foresee a daily demand growth of approximately 2.4 million barrels.
To bolster prices, Saudi Arabia has announced a reduction of one million barrels per day in its crude oil production. The International Energy Agency (IEA) has expressed concerns about a potential significant supply deficit by year-end due to the production cuts by Saudi Arabia and Russia, both prominent Opec+ members.
Al Ghais clarified, “This is a voluntary, precautionary measure taken by two independent nations, Saudi Arabia and Russia, in response to uncertainties.” Following Russia’s Ukraine invasion in February 2022, oil prices surged, peaking at over $120 a barrel in June of the same year. They moderated to slightly above $70 a barrel in May of the current year, but have been steadily rising as producers aim to limit output in support of the market.
On Tuesday, Brent crude, a price benchmark, surpassed $95 per barrel, amid forecasts of reduced supplies, with concerns that it might breach $100 per barrel. This increase prompted a warning about potential fuel price hikes in the next ten months, and raised worries about prolonged inflation in major economies.
However, Al Ghais emphasized that Opec’s greater concern lies with the potential lack of investment in the oil sector. He stated, “Some have proposed halting investments in oil. We believe this is equally risky. It could lead to future volatility and possible supply shortfalls. Therefore, at Opec, we consistently advocate for the necessity of ongoing investment in the oil industry, along with efforts to decarbonize the sector and incorporate other forms of alternative energy such as renewables.”
When asked if he was worried about rising oil prices driving global inflation above $100 per barrel, Al Ghais advised against a myopic perspective. He stated, “It’s important not to take a short-term view. We project demand to continue growing by over 2 million barrels a day next year, subject, of course, to the uncertainties in the global market. Nevertheless, we remain quite optimistic… that global oil demand will prove to be quite resilient this year.”
Al Ghais projected that the oil industry would necessitate nearly $14 trillion in investment up to the year 2045. He explained, “Energy demand will increase by nearly 25% by 2045 compared to today, and all types of energy will be essential.” These remarks precede a significant gathering of key figures in the oil industry at the International Petroleum Exhibition and Conference (ADIPEC) in Abu Dhabi scheduled for Wednesday.
