Harvey, Irma impact on oil market to go far beyond US – Barkindo
Oxford. The consequences of the Hurricane Harvey and Irma will undoubtedly continue to have implications far beyond the US Gulf Coast for many months, said OPEC Secretary General Mohammad Sanusi Barkindo.
Delivering a speech at the Oxford Energy Seminar, Barkindo noted that this impact will be felt for example, in terms of refinery runs, trade flows, crude and product pricing and short-term oil demand, Trend agency reports.
“We need to remember that low oil prices are bad for producers today and lead to situations that are bad for consumers tomorrow. And high oil prices are bad for consumers today and lead to situations that are bad for producers tomorrow,” said OPEC secretary general.
He pointed out that while investments are expected to pick up slightly this year and in 2018, it is clear that this is not anywhere close to past levels and it is more evident in short-cycle, rather than long-cycle projects, which are the industry’s baseload.
“Additionally, we should remember that the actual volume of conventional oil discovered across the globe has halved over the past four years, compared to the previous four-year period,” noted Barkindo.
As can be seen from previous price cycles, such pronounced and long-term declines in investments are a serious threat to future supply, he said.
“But given our projected future demand for oil, the world simply cannot afford a supply crunch. Thus, we need to continue to make every effort to make sure that future supply is not jeopardized. Recognizing and respecting the link between long-term security of supply and short-term conditions is critical. In other words, we all need to work hard for sustainable market stability,” added OPEC secretary general.
On May 25, OPEC member countries and non-OPEC parties, Azerbaijan, Kingdom of Bahrain, Brunei Darussalam, Kazakhstan, Malaysia, Mexico, Sultanate of Oman, the Russian Federation, Republic of Sudan, and the Republic of South Sudan agreed to extend the production adjustments for a further period of nine months, with effect from July 1, 2017.
The reductions will be on the same terms as those agreed in November.