Grant Smith and Manus Cranny, Bloomberg News

LONDON
EnergiesNet.com 08 19 2022

Global oil markets face a high risk of a supply squeeze this year as demand remains resilient and spare production capacity dwindles, the new head of OPEC said.

Fears over slowing consumption in China and the wider world — which have pushed crude prices 16 per cent lower this month — have been exaggerated, OPEC Secretary-General Haitham Al-Ghais said in an interview with Bloomberg Television. 

At the same time, producers in the Organization of Petroleum Exporting Countries and beyond are running out of extra supplies they can bring to market, Al-Ghais said at OPEC’s Vienna headquarters. The Kuwaiti oil executive was appointed as the group’s top diplomat this month.

“We are running on thin ice, if I may use that term, because spare capacity is becoming scarce,” Al-Ghais said. “The likelihood of a squeeze is there.”

International oil prices have retreated to near US$90 a barrel amid signs of a slowing economy in China — where fuel use slumped to a two-year low in July — and a lackluster holiday driving season in the US. Still, the OPEC chief remains confident that world oil demand will increase by almost 3 million barrels a day this year, bolstered by China’s return from COVID-related lockdowns.

“China is still a source of phenomenal growth,” he said. “We haven’t seen China open up exactly — there’s a strict COVID Zero policy — I think that will have an impact when China gets back to full steam.”

Al-Ghais’ decades of experience at Kuwait Petroleum Corp. included opening the company’s first Beijing office in 2005.

bloomberg.com 08 17 2022