OPEC Secretary General warns about cause of fluctuation in petroleum market

The Secretary General of OPEC warned that investing less than necessary in the petroleum and gas sector may cause fluctuation in the market in the long term and jeopardize growth.

At the Middle East Petroleum and Gas Conference in Dubai, Haitham Al-Ghais said that instead of replacing one form of energy with another, the world should focus on reducing greenhouse gas emissions, and emphasized: “Major investments in all energy sectors are essential. This is the fact that needs to be mentioned.”

According to OPEC estimates, the world needs $12.1 trillion investment to meet the growing demand for petroleum in the long term.

At the same event, Fereidoun Fesharaki, head of FGE consulting company, said: “With the growth rate of around eight million barrels per day of global demand for petroleum, the world may face a supply problem due to Western sanctions against Russia that limit production growth. Russia may maintain production at around 10-11 million barrels per day, but with continued sanctions, future growth of two million barrels per day is unlikely.”

Russian petroleum and gas have been subjected to extensive Western sanctions aimed at limiting sales to the West and price ceilings for Russian petroleum.

Fesharaki said: “Now that at higher prices, there is no concern about the growth of American shale petroleum production, OPEC is acting completely different compared to the past. The group is focused on generating revenue from petroleum resources before the demand for petroleum reaches its peak.”

Fesharaki stated that he has observed the desire to maintain the price of petroleum above 80 dollars per barrel and the desire for the price to cross 100 dollars if the supply to the market is limited.

OPEC and its allies, known as the OPEC+ group, agreed in late 2022 to cut production to support the market in response to a worsening economic outlook. Then in April, they made another surprising move, with Saudi Arabia and other OPEC+ members announcing voluntary production cuts of a total 1.16 million barrels per day.

According to a Reuters report, Mike Mueller, CEO of Vitol Asia company, announced at the Middle East Petroleum and Gas Conference: “Demand for petroleum will increase by up to two million barrels per day in the second half of this year, under the influence of Asian growth. Seasonal demand will increase and lead to the withdrawal of reserves, which means less excess supply.”