Leader of oil cartel predicts enduring period of elevated prices

According to the secretary general of Opec+, the price of oil will remain high due to increasing energy demand. Opec+ is a group of 23 oil-exporting countries that determine the amount of crude oil to sell on the global market. Haitham Al Ghais stated that they expect demand to increase by approximately 2.4 million barrels per day. In an effort to boost prices, Saudi Arabia announced that it would reduce crude oil production by one million barrels per day. The International Energy Agency (IEA) expressed concerns that this decision, made by major oil producers Saudi Arabia and Russia, could lead to a significant shortage of supply by the end of the year. Al Ghais referred to this reduction as a preemptive measure due to uncertainties. Following Russia's invasion of Ukraine in 2022, oil prices skyrocketed but dipped in May 2023. However, they have since steadily risen as producers attempt to limit output to support the market. Brent crude, a price benchmark, recently reached over $95 a barrel, raising fears of even higher prices. Al Ghais highlighted Opec's concern about underinvestment in the oil sector, emphasizing the importance of continuing to invest in the industry while also working towards decarbonization and alternative energy sources. When asked about the potential impact of oil prices over $100 per barrel on global inflation, Al Ghais urged taking a long-term perspective. He expressed optimism about continued growth in global oil demand, with projections of over 2 million barrels per day next year. Al Ghais estimated that nearly $14 trillion in investment would be required in the oil industry by 2045, as energy demand is expected to grow by almost 25% compared to the present. These statements were made ahead of a meeting of key oil industry players at the International Petroleum Exhibition and Conference (ADIPEC) in Abu Dhabi.