Proactive Investors - Oil prices are not going to fall soon according to the head of producers cartel Opec despite predictions that demand for fossil fuels will peak this decade.
Haitham Al Ghais, OPEC’s secretary-general, warned that demand will continue to rise and that investment in the oil and gas sector of at least US$12 trillion is required to avoid an energy crunch in 2045.
“By underinvesting, we are actually endangering energy security," he told reporters at the ADIPEC energy conference.
"I think there are serious possibilities that prices, the volatility, will be increasing as demand grows."
Oil prices have spiked this year due to cut to production cutbacks by Saudi Arabia and Russia, which, in the Saudi’s case, Al Ghais said was a precautionary measure due to the current economic uncertainties.
Saudi Arabia recently cut production of crude oil by a million barrels a day to boost prices, which have since risen to around US$92 a barrel from nearer to US$70 at the time of the announcement..
Al Ghais added that halting investment in the oil and gas sector would be a dangerous move.
"Some have called for stopping investments in oil. We believe this is equally dangerous. It will lead to volatility in the future and possible supply shortages," he told the BBC.
“And therefore we at Opec have always advocated for the importance of continuing to invest in the oil industry as we also invest in decarbonising the industry and move on to adding other forms of alternative energy such as renewables".
"For next year we see demand continuing to grow north of 2 million barrels a day - of course, all subject to some of the uncertainties in the global market. Nevertheless, we still feel quite optimistic... that global oil demand is going to be quite resilient this year".
"Energy demand will grow by nearly 25% by the year 2045 compared to what it is today - and all forms of energy will be required", he said.