The world’s oversupply of oil must be resolved and the market rebalanced, OPEC Sec. Gen. Abdallah Salem El-Badri told IHS CERAWeek attendees, adding that the current price slump is a “very nasty” oil price cycle compared to previous cycles.
El-Badri said high oil prices from earlier years contributed to current high oil supply.
“The price will go up, no doubt about it,” El-Badri said, although he did not specify a time. “The big concern is no investment now, no supply coming into the market in the future. Price will go up.”
El-Badri was on a panel with Fatih Birol, International Energy Agency executive director, who also emphasized the need for investment in oil and gas despite low oil prices.
Birol said IEA has discussions with OPEC members, and that IEA is pleased that Mexico has agreed to join IEA. El-Badri said OPEC has talks with most producing countries, and OPEC is willing to have talks with US officials. “We talk with everybody but the United States,” El-Badri said.
Ali al-Naimi, Saudi Arabia minister of petroleum and mineral resources, is scheduled to address IHS CERAWeek Feb. 23. Last week, Saudi Arabia, Russia, Venezuela, and Qatar agreed to a production freeze if other producers participate. Under the proposal, production would be set at January levels.
El-Badri called the freeze proposal “a first step to see what we can achieve, and maybe if this is successful, we can take other steps in the future. I don’t know.”
Birol said Russia’s production is on the decline, and any agreement among producers to maintain oil output levels means Russia would have to boost its oil production to ensure it could maintain January levels going into the future.
The Middle East will remain the biggest source of oil exports, particularly oil exports to Asia, Birol said. Speaking to reporters during a separate news conference, Birol said Middle East oil exports are of a far greater magnitude than whatever volume develops for US oil exports.
In response to questions about climate change, Birol said natural gas increasingly is replacing coal for power generation, which in turn contributes to carbon dioxide emissions reductions.
Contact Paula Dittrick at [email protected].