Global Oil Production Declining, Not Meeting Fuel Demand – OPEC
The Secretary General of the Organisation of Petroleum Exporting Countries, Haitham Al Ghais, has warned that global oil production capacity was dropping.
Speaking during a recent interview with S&P Global Commodity Insights, he stated the refinery sector was not keeping pace with growing fuel demands, putting the world at risk of future supply crunches.
“The industry needs significant investment, but finds itself in an increasingly challenging financial environment, exacerbated by ‘unhelpful criticism and misguided narratives’ about fossil fuels,” he explained.
Ghais has been engaged in notable disagreements with the International Energy Agency regarding their criticism of OPEC’s production cuts and communication regarding the future energy mix.
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He advocated a dialogue that would accurately reflect the significant factors involved in shaping energy’s future.
He said, “In terms of the current outlook, on the oil demand side, we see global demand growth in 2023 at around 2.3 million b/d. We also know that there are several economic uncertainties the world is carefully navigating through, including high inflation, higher interest rates, particularly in the Eurozone and the US, the impending US debt ceiling, high debt levels in many countries and regions, and how China’s reopening plays out through the rest of the year.
“As always, we will continue analysing and closely monitoring all technical market fundamentals in detail.”
All these technical factors will be carefully considered in the discussions and whatever decision is taken by ministers at the June meeting. However, we cannot pre-empt what will be discussed, and what any potential outcome will be.
While emphasising the necessity for additional production cuts and considering the potential easing of market conditions soon, Ghais cautioned against jumping to conclusions and advised waiting until ministers convene in early June.
Furthermore, he noted that it was crucial to restate that the voluntary production adjustments announced in April 2023 were made independently by individual countries and were not part of the DoC framework.
He added that given market developments in the period since those voluntary adjustments had proven to be the right ones.
“Over the years, the DoC has consistently demonstrated its attentiveness, proclivity, and adaptability, going to great lengths to stabilise the oil market during these exceptional circumstances. This commitment serves the best interests of producers, consumers, the oil industry, and the global economy, and there is no question that this dedication will persist.
