At least $12 trillion in oil industry investments are needed to prevent a spike in energy prices, OPEC chief says
- OPEC Secretary-General Haitham Al-Ghais warned that energy prices could spike due to underinvestment.
- At least $12 trillion needs to be invested in the industry through 2045, he told CNN.
If the global economy wants to avoid spiking energy prices, oil industry investments need to substantially pick up, OPEC Secretary-General Haitham Al-Ghais told CNN.
Through 2045, the industry will require at least $12 trillion in investments to avoid potentially costlier crude, he said.
"By underinvesting, we are actually endangering energy security," he said on Monday, speaking on the sidelines of the ADIPEC energy conference. "I think there are serious possibilities that prices, the volatility, will be increasing as demand grows."
Oil prices have gained rapidly in recent months, as OPEC's production cuts have impacted supply while demand has been strong amid a resilient US economy.
When asked whether oil prices will hit $100 a barrel, Al-Ghais replied, "the factors that may lead to this number … have been there for some time and continue to be there — most notably, the under investments that we've seen in oil."
His warning comes about a week after the International Energy Agency announced that global oil, gas, and coal demand will likely peak this decade.
"Based only on today's policy settings by governments worldwide — even without any new climate policies — demand for each of the three fossil fuels is set to hit a peak in the coming years," IEA Chief Fatih Birol wrote. "This is the first time that a peak in demand is visible for each fuel this decade — earlier than many people anticipated."
But the OPEC head underlined that fossil fuels will remain an essential component of the world's energy environment, especially given the pace of population and economic growth. Renewables or hydrogen alone won't be enough to satisfy future energy demand, he told CNN.
It's also in the interest of key OPEC members, such as Saudi Arabia, to keep the price of oil in check. While a $100 a barrel level may help the kingdom fund economic diversification, analysts have warned that further price hikes could crash global demand.
Saudi Arabia and Russia both boosted their crude exports last month, collectively increasing them by 1 million barrels, Bloomberg reported.
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