Top OPEC Official Raises Alarming Concerns Over Critical Shortfall in Oil Investments
Head of OPEC warns of perilous underinvestment in oil sector, threatening global energy security and potentially causing oil prices to surge to $100 per barrel
The head of the Organization of the Petroleum Exporting Countries (OPEC), a consortium of major oil producers worldwide, cautioned on Monday that insufficient investment in the oil industry could jeopardize global energy security and potentially drive crude prices up to $100 per barrel.
According to Haitham Al Ghais, OPEC's secretary-general, to avoid a surge in energy costs, the oil industry requires a minimum investment of $12 trillion globally between now and 2045. Al Ghais disclosed this during an interview with CNN's Becky Anderson at the ADIPEC energy conference held in Abu Dhabi.
He cautioned that neglecting to invest adequately in the oil industry poses a significant risk to energy security. In the absence of such investments, he noted the high likelihood of increasing prices and volatility as demand continues to rise.
Brent crude oil, the international standard, has surged by 29% since reaching a low point in mid-June. Last week, it traded close to $97 per barrel, marking its highest level since November of the previous year. This substantial increase can mainly be attributed to Saudi Arabia and Russia implementing prolonged production cuts. When asked about the possibility of oil reaching $100 per barrel, Al Ghais responded that OPEC does not predict prices. However, he acknowledged that the factors that could contribute to this increase have persisted for some time, particularly the insufficient investments in the oil sector.
"I believe it is crucial for the world to address this matter correctly," he emphasized. "Insufficient investment puts energy security at risk, as the oil industry will need a minimum of $12 trillion in global investments between now and 2045."
Al Ghais asserted that due to population and economic growth, it is practically impossible to meet the world's future energy needs solely through renewables or relying on hydrogen as an energy source.
"We have to make sure that the world has enough energystable, affordable, reliable, not intermittent sources of energy," he added.
A chimney from the Linden Cogeneration Plant is seen in Linden New Jersey April 22, 2022.
Kena Betancur/VIEWpress/Getty Images
The comments follow the International Energy Agency's recent prediction that global demand for oil, natural gas, and coal is expected to peak by 2030.
The IEA has urged for an immediate halt on investments in new oil and gas projects in order to have any chance of achieving a net reduction in planet-heating emissions to zero by 2050. Fatih Birol, the executive director of the agency, stated that even with the significant growth of renewable energy, limiting global warming to 1.5 degrees Celsius above pre-industrial levels, the point at which extreme weather will have disastrous consequences, remains an immense challenge.
To attain this objective, there must be a 25% decrease in global demand for fossil fuels by 2030, as projected by the IEA.
Al Ghais acknowledged that reaching this target would pose a significant and formidable challenge, considering that the proportion of fossil fuel consumption within global energy demand has hardly shifted in the past 30 years.
