Dubai: OPEC’s top official said slowing oil demand in Europe and the US are posing a concern for the global market, even as Asia experiences ‘phenomenal’ growth.
“We see a divided market “- almost like two markets,” OPEC Secretary-General Haitham Al Ghais said at the CERAWeek by S&P Global conference Tuesday. Ensuring ‘security of demand’ in regions where inflation is crimping consumption is as critical as ensuring supplies, he said.
For now, though, rebounding demand in Asia will help keep the market broadly balanced in the first-half of the year, with global consumption seen rising by 2.3 million barrels a day to average 101.87 million barrels a day in 2023, according to the latest report from OPEC’s Vienna-based secretariat. After that, the market is expected to tighten as global inventories decline and the 23-nation OPEC+ coalition aims to keep production levels unchanged for the rest of the year.
Al-Ghais on Tuesday cautioned that the lack of investment in new production capacity is threatening global energy security. OPEC holds about 3.5 million barrels of idled capacity, or about 4 per cent of total global output, according to the International Energy Agency in Paris. Many OPEC members, such as Angola and Nigeria, are unable to produce in line with their output quotas as they wrestle with inadequate investment and operational disruptions.
While the alliance known as OPEC+ is critical to market stability, “we can’t shoulder this alone,” said Al-Ghais, who has previously described his outlook for this year as one of ‘cautious optimism.’
The group is due to hold an online monitoring meeting to review market conditions early next month, followed by a full ministerial conference in June to set policy for the rest of the year.
Al-Ghais said one of his top priorities as head of the cartel is to transform the oil sector’s public image from that of a polluter to an active participant in the energy transition. To that end, he has established the group’s first ‘environmental matters’ department.