OPEC+ is an assemblage comprising 23 nations primarily exporting petroleum resources, collectively responsible for determining the quantum of unrefined oil to be made available for sale within the global marketplace.
According to Haitham Al Ghais, it has been observed that there is an increase in demand of approximately 2.4 million barrels per day. This information was shared during an interview with the BBC.
Saudi Arabia’s Decision Will Lead to Oil Shortages
The Kingdom of Saudi Arabia has officially announced its decision to curtail its crude oil production by one million barrels per day, with the primary objective of stimulating and stabilizing global oil prices.
According to the International Energy Agency (IEA), the recent decision made by Saudi Arabia and Russia, both prominent oil producers and members of Opec+, to reduce production levels has the potential to result in a notable deficit in supply by the conclusion of this calendar year.
According to Mr. Al Ghais, the action above can be characterized as a voluntary determination made by two independent and autonomous nations, namely Saudi Arabia and Russia. The decision above may be considered prudent or pre-emptive owing to uncertainties.
Oil Price Rises Despite Russia’s Actions in Ukraine
In light of the incursion by Russia into Ukraine in February 2022, there was a notable escalation in oil prices, with a peak exceeding $120 per barrel observed in June of the same year. The cost of oil experienced a decline to slightly above $70 per barrel in May of the current year. However, it has subsequently exhibited a consistent upward trajectory due to concerted efforts by producers to curtail production and bolster market stability.
On Tuesday, Brent crude, a widely recognized pricing benchmark, experienced a notable breach at $95 per barrel. This occurrence coincided with prevailing forecasts of reduced supply, instigating concerns regarding the potential $100 per barrel threshold violation. The increase in fuel prices has elicited a cautionary message to drivers regarding the possible escalation of fuel costs within the next ten months. Moreover, it has engendered concerns regarding the potential protraction of inflation in significant economies.
According to Mr. Al Ghais, OPEC expresses a greater level of concern regarding the issue of “underinvestment” within the oil sector.
Failure to Invest in the Oil Industry Is Extremely Dangerous
There has been a growing advocacy for the cessation of investments in the oil industry. It is our professional opinion that this carries an equal level of risk. The potential consequences encompassing future volatility and the potential for supply shortages are anticipated.
The Organization of the Petroleum Exporting Countries (OPEC) consistently emphasizes the significance of sustained investments in the oil sector while concurrently prioritizing efforts to decarbonize the industry. Furthermore, OPEC recognizes the imperative of diversifying energy sources by incorporating alternative forms of energy, including renewables.
When inquired about his concern regarding the potential impact of escalating oil prices on global inflation, particularly if it surpasses the $100 per barrel threshold, Mr. Al Ghais emphasized the significance of adopting a long-term perspective and avoiding a narrow-minded approach.
In the forthcoming year, it is anticipated that the demand will persistently expand beyond the threshold of 2 million barrels per day. However, it is imperative to acknowledge that this projection remains contingent upon the prevailing uncertainties within the global market. However, a general sense of cautious optimism exists regarding the resilience of global oil demand throughout the current year.
Demand for Energy Will Grow Enormously by 2045
According to Mr. Al Ghais, it has been projected that the oil industry will require an estimated investment of approximately $14 trillion by 2045.
According to the speaker, there is an anticipated increase in energy demand of approximately 25% by the year 2045 in comparison to the present state. Furthermore, it is emphasized that all types of energy will be necessary to meet this demand.
The individual’s remarks precede a forthcoming gathering of prominent stakeholders in the oil industry, scheduled on Wednesday in Abu Dhabi as part of the International Petroleum Exhibition and Conference (ADIPEC).