OPEC+ Outlook: Oil Demand and Price Dynamics
The secretary general of OPEC+ expects oil demand to remain robust this year. OPEC+ consists of 23 oil-exporting nations who control global crude oil sales.
Haitham Al Ghais, OPEC+’s spokesperson, foresees a daily demand growth of about 2.4 million barrels. Saudi Arabia plans to cut daily crude oil production by one million barrels to boost prices. Concerns arise as the International Energy Agency (IEA) warns that these production cuts could lead to a significant supply shortage by year-end.
Mr. Al Ghais clarifies that these production cuts are voluntary and preemptive actions by sovereign nations. After Russia’s invasion of Ukraine in 2022, oil prices surged but later settled at around $70 per barrel in May this year. They’ve since risen due to output restrictions.
Brent crude, a price benchmark, crossed $95 per barrel, fueling fears of supply shortages and potential breaches of the $100 per barrel mark. This has raised concerns about rising fuel prices and prolonged inflation in major economies.
However, Mr. Al Ghais emphasizes that OPEC’s main concern is underinvestment in the oil sector and advocates for ongoing investments while transitioning to alternative energy sources.
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He believes it’s crucial to avoid short-sightedness when assessing the impact of oil prices on global inflation and remains optimistic about oil demand resilience for the coming year, albeit with a recognition of global market uncertainties.
Additionally, Mr. Al Ghais highlights the need for substantial investment in the oil industry, estimating a requirement of nearly $14 trillion by 2045 to meet growing energy demand.
These comments precede a pivotal meeting of key oil industry players during the International Petroleum Exhibition and Conference (ADIPEC) in Abu Dhabi scheduled for Wednesday.
Alexander Stefanov
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