The Secretary-General of OPEC+, Haitham Al Ghais, has stated that oil prices are expected to remain high due to increasing energy demand. OPEC+ is a coalition of 23 oil-exporting nations responsible for determining global crude oil sales.
“We anticipate demand to grow by approximately 2.4 million barrels per day,” Al Ghais revealed to the BBC. In response 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 cautioned that this production cut by Saudi Arabia and Russia, two prominent OPEC+ members, could result in a “significant supply deficit” by year-end. Al Ghais emphasized that the decision was a voluntary and preemptive move by these sovereign nations due to uncertainties.
Oil prices surged after Russia’s invasion of Ukraine in February 2022, reaching over $120 per barrel in June of that year. Although they dipped to just above $70 per barrel in May, they have steadily climbed as producers limited output to support the market. Brent crude, a key price benchmark, exceeded $95 per barrel, leading to concerns about it breaching the $100 per barrel mark. This increase raised warnings of potential fuel price hikes for drivers over the next 10 months and fears of prolonged inflation in major economies.
However, Al Ghais highlighted that OPEC’s primary concern is the risk of “underinvestment” in the oil sector. He stressed the importance of continued investment in the industry to prevent future volatility and supply shortages. OPEC also advocates for investing in decarbonization and diversifying into alternative energy sources like renewables.
When asked about the potential impact of oil prices exceeding $100 per barrel on global inflation, Al Ghais urged a longer-term perspective, emphasizing that global oil demand is expected to remain resilient in the coming year, with growth exceeding 2 million barrels per day.
Al Ghais also emphasized that the oil industry would require approximately $14 trillion in investment by 2045 to meet growing energy demand, stating that various forms of energy would be essential to meet future needs.
These remarks precede a crucial meeting of key players in the oil industry at the International Petroleum Exhibition and Conference (ADIPEC) in Abu Dhabi.