The secretary general of Opec+ forecasts that this year’s oil demand will increase and be “resilient”.
The 23 oil-exporting nations that make up Opec+ decide how much crude oil will be sold on the global market.
“We see demand growing about 2.4 million barrels a day,” Haitham Al Ghais told the media.
The production of crude oil will be reduced by a million barrels per day, according to Saudi Arabia, in an effort to boost prices.
The decision by Saudi Arabia and Russia, two significant oil producers and Opec+ members, to cut production may result in a “significant supply shortfall” by the end of this year, according to the International Energy Agency (IEA).
According to Mr. Al Ghais: “This is a voluntary decision taken by two sovereign nations, and Russia. This decision can be described as precautionary or pre-emptive because of uncertainties”.
Oil prices skyrocketed in the wake of Russia’s invasion of Ukraine in February 2022, reaching more than $120 per barrel in June of last year. In May of this year, they retreated to just over $70 a barrel, but since then, as producers have worked to limit output to support the market, they have steadily risen.
With supplies expected to be reduced, the price of Brent crude, a benchmark for prices, breached $95 a barrel on Tuesday, raising concerns that it may go above $100. The increase sparked concerns that inflation in important economies might persist and led to a warning to drivers that fuel prices may rise in the ensuing 10 months.
Al Ghais, however, claimed that Opec was more worried about “under-investment” in the oil industry.
“Some have called for stopping investments in oil. We believe this is equally dangerous. It will lead to volatility in the future, possible supply shortages. And therefore we at Opec have always advocated for the importance of continuing to invest in the oil industry as we also invest in decarbonising the industry and move on to adding other forms of alternative energy such as renewables”.
When asked if he was concerned about rising oil prices having an impact on global inflation if they reached $100 per barrel, Mr. Al Ghais responded that it was “important not to look at things in a short-sighted manner”.
“For next year we see demand continuing to grow north of 2 million barrels a day – of course, all subject to some of the uncertainties in the global market. Nevertheless, we still feel quite optimistic… that global oil demand is going to be quite resilient this year”.
According to Mr. Al Ghais, the oil sector will require close to $14 trillion in investments by 2045.
“Energy demand will grow by nearly 25% by the year 2045 compared to what it is today – and all forms of energy will be required”, he said.
His remarks come ahead of an event for the International Petroleum Exhibition and Conference (ADIPEC) that will bring together important oil players on Wednesday in Abu Dhabi.
Source-BBC
