OPEC Warns of Potential $100 Per Barrel Oil Prices Due to Underinvestment
Haitham Al Ghais, the Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), emphasized the urgent need for substantial investments in the global oil industry to maintain energy security and prevent a surge in crude oil prices. In an interview with CNN’s Becky Anderson during the ADIPEC energy conference in Abu Dhabi, Al Ghais highlighted the danger posed by underinvestment in the oil sector.
Al Ghais stressed that the world needs a total investment of at least $12 trillion in the oil industry between now and 2045 to avert a potential spike in energy prices. He described the current situation of underinvestment in the oil industry as “dangerous,” warning that failing to address this issue could lead to increased price volatility as global demand continues to rise.
The global benchmark for oil prices, Brent crude oil, has recently surged by 29% since its mid-June low, reaching nearly $97 per barrel last week. This increase has been primarily attributed to extended output cuts implemented by major oil producers, including Saudi Arabia and Russia.
When asked about the possibility of oil prices reaching $100 per barrel, as some analysts have suggested, Al Ghais clarified that OPEC does not make price forecasts. However, he pointed out that the factors that could contribute to such a price level have been present for some time, particularly the lack of investments in the oil industry.
Al Ghais emphasized the critical importance of addressing this issue, stating, “By underinvesting, we are actually endangering energy security. The world will require at least $12 trillion of investments globally for the oil industry from now to the year 2045.”
He further highlighted that due to population and economic growth, renewables and hydrogen alone cannot meet the world’s future energy demands. Al Ghais asserted that ensuring stable, affordable, and reliable sources of energy, rather than intermittent ones, is essential.
These remarks come shortly after the International Energy Agency (IEA) predicted that global demand for oil, natural gas, and coal could peak by 2030. The IEA called for an immediate halt to spending on new oil and gas projects to achieve net-zero emissions by 2050. Fatih Birol, the Executive Director of the IEA, stressed the monumental challenge of limiting global warming to 1.5 degrees Celsius above pre-industrial levels.
To meet this goal, global fossil fuel consumption must decrease by 25% by 2030 compared to current levels, according to IEA projections. Al Ghais acknowledged this challenge, noting that fossil fuel consumption as a proportion of global energy demand has seen little change over the past three decades.
