Haitham Al Ghais, the new secretary general of the production group, during a recent interaction with Reuters said that it is not OPEC that is to blame for high energy prices, but rather policymakers, legislators, and a lack of investments in the oil and gas sector.
Since the COVID-19 price spike, there has been little investment in the oil and gas industry, which has considerably reduced OPEC’s spare production capacity and hindered the organization’s ability to react swiftly to any supply disruptions.
Brent crude prices nearly reached an all-time high of USD 147 per barrel in March as supply issues were made worse by Russia’s decision to send soldiers into Ukraine. Prices are still excruciatingly high for individuals and businesses worldwide, notwithstanding a subsequent reduction.
Haitham Al Ghais, who assumed office on August 1, said, “Don’t blame OPEC, blame your own officials and lawmakers because OPEC and the producing countries have been pushing for investing in oil (and gas) time and time again.”
The International Energy Agency stated in July that oil and gas investment is up 10% from last year but is still well below 2019 levels, adding that some of the immediate deficits in Russian exports need to be made up by output elsewhere.
The OPEC official added that OPEC members had increased refining capacity to counterbalance the decline in Europe and the United States while also blaming a lack of investment in the downstream sector.
To travel from point A to point B overnight, Al Ghais said, “You have to move from point A to point B. We are not claiming that the world will exist on fossil fuels forever.”
He added that he hopes “investors, financial institutions, and policymakers as well globally seriously take this matter (to) heart and take it into their plans for the future.”
“OPEC exists to ensure that the world has access to enough oil, but “it’s going to be very challenging and very difficult if there is no buy-in into the importance of investing,” Haitham Al Ghais said.
Relatively Optimistic
Since March, the price of oil has fallen, and this week Brent hit a six-month low below USD 92 per barrel.
Taking a somewhat upbeat stance on the prognosis for 2023 as the world deals with rising inflation, Haitham Al Ghais noted that the decline reflects concerns about an economic slowdown and obscures physical market fundamentals.
Haitham Al Ghais declared, “There is a lot of fear. There is a lot of speculation and anxiety, and that is primarily what is causing the price decline.”
“While our perspectives on things in the real world are very different. The demand is still strong. We remain very positive about demand for the remainder of this year and remain very bullish on it,” he added.
Haitham Al Ghais, who spent four years working in China earlier in his career, claimed that the concerns about China were “very taken out of proportion.”
China continues to witness remarkable economic growth.
The Organization of the Petroleum Exporting Countries (OPEC+), which consists of Russia and other allies and unwinds record oil production cuts made in 2020 at the height of the pandemic, is increasing output by 100,000 barrels per day starting in September.
Haitham Al Ghais said it was too soon to predict what OPEC+ would decide before its upcoming meeting on September 5, even though he was optimistic about the coming year.
Everything hinges on how events play out. But as I stated, we remain optimistic. We do anticipate a decrease in demand growth in 2023, but it shouldn’t be much worse than it has been in the past, he stated
Regarding the forecast for 2023, he said, “Yes, I am fairly hopeful. I believe that the globe is coping with the effects of inflation on the economy extremely well.”
According to Haitham Al Ghais, OPEC+ started to reduce supplies in 2017 to address a supply glut that developed the years 2014 to 2016. OPEC also wants to make sure that Russia continues to participate in the OPEC+ oil production agreement through 2022.
“We would dearly love to extend the agreement with Russia and the other non-OPEC producers. This is a long-term partnership involving 23 nations in greater and more extensive kinds of communication and cooperation. It goes beyond simple manufacturing adjustment,” Haitham Al Ghais declared.