OPEC Kingpins Warn About World’s Dwindling Energy Capacity

OPEC- energynewsbeat.com

The oil ministers of Saudi Arabia and the United Arab Emirates warned that spare capacity is decreasing in all energy sectors as producers slash investment, causing everything from crude to diesel and natural gas to trade at or near record highs.

“I am a dinosaur, but I have never seen these things,” Saudi minister Prince Abdulaziz bin Salman, who’s been attending OPEC meetings since the 1980s, said Tuesday at a conference in Abu Dhabi, referring to the surge in prices for refined products. “The world needs to wake up to an existing reality. The world is running out of energy capacity at all levels.”

The comments came as U.S. gasoline pump prices rose to a record. Those for diesel did so in March.

The prince’s UAE counterpart, Suhail al Mazrouei, said that without more investment across the globe, OPEC+ wouldn’t be able to guarantee sufficient supplies of oil when demand fully recovers from the coronavirus pandemic.

“We’ve been warning about the lack of investment,” he said in an interview, also in Abu Dhabi. “That lack of investment is catching up with a lot of countries.”

Saudi Arabia and the UAE are among the few producers investing in greater output. They’re spending billions of dollars to raise their crude capacity by 2 million barrels a day between them by the end of this decade. Most others are struggling to get funding as shareholders and governments encourage a shift from fossil fuels to renewable energy.

Still, for now the oil market’s balanced and there is no need for OPEC+ to accelerate its gradual production increases, according to Mazrouei.

Record High Gas prices
Source: American Automobile Association

Many governments in importing nations disagree. The Organization of Petroleum Exporting Countries and its partners, a 23-nation group led by the Saudis and Russia, has been under pressure from the U.S., Europe and Japan to boost supply more quickly.

Crude has jumped more than 35% this year to around $105 a barrel, mostly due to Russia’s invasion of Ukraine in late February. The European Union is moving closer to a formal ban on Russian energy imports in a bid to punish Moscow for the war.

OPEC+ rubber-stamped a 432,000 barrel-a-day increase for June at its last meeting on May 5. It’s struggling to reach even that modest monthly target, with many members pumping below their quotas.

Prince Abdulaziz reiterated that OPEC+ would not allow geopolitics to affect its decisions. The U.S. has tried to get Saudi Arabia and the UAE to distance themselves from Russia since the attack on Ukraine.

Mazrouei said prices had been pushed up by the “politicization” of the oil market. He also said OPEC+ was unified and no member would break ranks by hiking output on its own.

About Stu Turley 3230 Articles
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor.   He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage, and is the Co-Host of the energy news video and Podcast Energy News Beat. Energy should be used to elevate humanity out of poverty. Let's use all forms of energy with the least impact on the environment while being sustainable without printing money. Stu is also a co-host on the 3 Podcasters Walk into A Bar podcast with David Blackmon, and Rey Trevino. Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.