According to the Secretary-General of OPEC+, Haitham Al Ghais, there is an expectation that the demand for oil will continue to grow and remain strong throughout this year. OPEC+ consists of 23 oil-exporting nations that collectively determine the quantity of crude oil to supply on the global market.
Al Ghais mentioned in an interview with the BBC that they anticipate a daily demand growth of approximately 2.4 million barrels. This comes as Saudi Arabia has announced its plan to reduce crude oil production by one million barrels per day in an effort to boost oil prices.
The International Energy Agency (IEA) has expressed concerns that the decision by major oil producers like Saudi Arabia and Russia, both members of OPEC+, to reduce production could lead to a notable supply deficit by the end of the year.
Al Ghais clarified that this production cut was a voluntary decision by two sovereign nations, Saudi Arabia and Russia, and was taken as a precautionary measure due to uncertainties in the market.
Oil prices had surged following Russia's invasion of Ukraine in February 2022, reaching over $120 per barrel by June of the same year. While they declined to slightly above $70 per barrel in May this year, prices have been steadily rising as producers have limited output to support the market.
The price of Brent crude, a key benchmark for oil prices, recently surpassed $95 per barrel, with concerns that it may breach $100 per barrel. This has raised concerns about potential fuel price increases in the coming months and the possibility of prolonged inflation in major economies.
However, Al Ghais emphasized that OPEC's primary concern is the potential "underinvestment" in the oil sector. He argued against calls to halt oil industry investments, highlighting that such actions could lead to future supply shortages and market volatility. OPEC advocates for continued investment in the oil industry while also supporting efforts to decarbonize and incorporate alternative energy sources like renewables.
When asked about the potential impact of rising oil prices on global inflation if they exceed $100 per barrel, Al Ghais stressed the importance of considering long-term perspectives. He expressed optimism that global oil demand would remain resilient this year, with anticipated growth exceeding 2 million barrels per day, despite uncertainties in the global market.
Al Ghais also noted that the oil industry would require approximately $14 trillion in investments until 2045 to meet energy demands, which are projected to increase by nearly 25% compared to current levels. This discussion precedes a meeting of key oil industry participants in Abu Dhabi for the International Petroleum Exhibition and Conference (ADIPEC).
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