Saudi Aramco stated that global oil production capacity is rapidly declining, and companies need to increase investment in production. In an interview in Riyadh, the company's CEO Amin Nasser said this represents a "major concern" as "spare capacity is shrinking." Nasser's comments come amid a 70% rise in crude oil prices this year to around $85 per barrel, following calls from several major consumers, including the United States, Japan, and India, for producers to pump more.
Nasser warned that the supply deficit in oil markets could worsen in 2022 if the spread of the coronavirus pandemic subsides and more people travel. He noted, "If there is a recovery in air travel next year, this surplus capacity will be depleted," emphasizing that "it has now reached a limited supply situation, and all remaining reserve quantities are depleting rapidly."
Many oil and gas traders have criticized governments and climate activists for calling on companies to stop investing in fossil fuels, stating that this will lead to an energy shortage in the next decade.
**Inventory Levels**
Aramco, the world's largest oil company, is investing billions of dollars to raise its daily output capacity to 13 million barrels from 12 million. This project is expected to be completed by 2027. However, the CEO's forecasts for next year conflict with those from some Wall Street banks and OPEC+ members. JPMorgan Chase has stated that oil markets will shift to a surplus of one million barrels by March from a current deficit of about 1.5 million barrels.
Saudi Energy Minister Prince Abdulaziz bin Salman told Bloomberg on Saturday that there could be a "significant increase" in crude inventories in 2022. He added, "We still have COVID," justifying OPEC+'s refusal to accelerate the easing of the significant supply cuts implemented last year. The minister noted that "jet fuel is still limited in terms of growth," warning that "if you deliver more now (of crude), you are accelerating the problem."
The Organization of the Petroleum Exporting Countries (OPEC) and its partners are increasing daily production by 400,000 barrels each month. The group of 23 countries, led by Saudi Arabia and Russia, will meet on November 4 to decide whether to change its strategy.
