OPEC’s top official said slowing oil demand in Europe and the United States is raising concerns for the global market, even as Asia is experiencing “phenomenal” growth.
“We see a split market, almost like two markets,” OPEC Secretary General Haitham Al-Ghais told the CERAWeek by S&P Global conference on Tuesday. Ensuring “security of demand” in regions where inflation reduces consumption is as critical as ensuring supplies, he said.
For now, however, the pick-up in demand in Asia will help keep the market broadly balanced in the first half of the year, with global consumption expected to rise by 2.3 million bpd to an average of 101, 87 million barrels per day by 2023, according to the latest report. of the OPEC secretariat based in Vienna. After that, the market is expected to tighten as global inventories decline and the 23-nation OPEC+ coalition, led by Saudi Arabia, aims to keep production levels unchanged for the rest of of the year
Al-Ghais warned on Tuesday that the lack of investment in new production capacity is threatening global energy security. OPEC has about 3.5 million barrels of idle capacity, or about 4 percent of total global production, according to the International Energy Agency in Paris. Many OPEC members, such as Angola and Nigeria, are unable to produce in line with their production quotas as they struggle with inadequate investments and operational disruptions.
While the alliance known as OPEC+ is critical to market stability, “we cannot take it on alone,” said Al-Ghais, who has previously described his outlook for this year as “d ‘cautious optimism’.
The group is due to hold an online follow-up meeting to review market conditions early next month, followed by a full ministerial conference in June to set policy for the rest of the year.
Al-Ghais said one of his top priorities as head of the cartel is to transform the public image of the oil sector from a polluter to an active participant in the energy transition. For this reason, it has created the group’s first “environmental issues” department.
