JEDDAH: The oil market is expected to continue improving, said Saudi Aramco President and CEO Amin H. Nasser.
“The good news is that the market is moving toward rebalancing,” he told the 18th International Oil Summit in Paris.
“This returning confidence is being driven by improving fundamentals, and accelerated by the production agreement reached last year,” he said, referring to a deal reached between the Organization of the Petroleum Exporting Countries (OPEC) and other producers to cut production.
Despite short-term volatility in oil prices, Nasser said there had been “a rapid drawdown of floating storage during the first quarter of this year.”
The oil industry should continue to invest in long-term projects despite short-term price volatility, he added.
“An estimated 30 million barrels per day of oil production capacity needs to be developed over just the next five years… and incremental, short-term and lower capital investment projects are just not going to cut it,” Nasser said.
“So while the short-term market points to an oil surplus, the supplies required for the years ahead are falling behind substantially because the vast, long-term investments in proven and reliable energy sources are not being made.”
He said oil will play a key role in meeting future global energy demand, and the concepts of oil demand peaking and leaving stranded resources in the ground are “misleading.”
He added: “The global economy is forecast to double in size by 2050, while roughly 2 billion additional people will need access to affordable energy, so overall demand for energy will be substantially higher than today. This higher demand will only be met by using all energy sources, because despite the progress being made, alternatives still face multiple challenges. We should all anticipate a long and complex energy transition.”
The CEO said: “The conclusion is clear: Oil demand will continue to grow… in absolute terms… at fairly healthy levels… for the foreseeable future.”