Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), Haitham Al-Ghais, said in a statement – Wednesday – that the oil sector is at risk in the absence of appropriate levels of investment.
This comes as OPEC said that the recent decline in oil prices was due to “exaggerated concerns” about demand, while it expressed cautious optimism regarding the fundamental factors affecting the crude market in 2024, and the organization maintained its relatively high expectations for oil consumption in 2024.
Oil fell to its lowest level in 6 months, near $72 per barrel, despite the announcement by the OPEC Plus alliance – which includes OPEC and other allies led by Russia – on November 30 of last year of a new round of production cuts in the first quarter of 2024.
But OPEC said in its monthly report that it remains “cautiously optimistic about the fundamental factors affecting the dynamics of the oil market in 2024,” explaining that speculators played a major role in pushing prices down.
The organization said in a comment on prices last November, “The prices of crude oil futures witnessed a significant decline due to heavy selling operations in light of severe fluctuations in the futures market.”
She added, “Exaggerated fears about the growth in demand for oil affected market dynamics, which negatively affected market sentiment.”
OPEC maintained its expectations for growth in global oil demand in 2023 at 2.46 million barrels per day, and also confirmed its expectations from last month for demand growth in 2024 at 2.25 million barrels per day.
OPEC continually expects stronger growth in demand next year compared to the expectations of other bodies such as the International Energy Agency, although the two bodies had a similar view on demand in 2023.
The International Energy Agency is scheduled to update its forecasts tomorrow, Thursday, after it had expected demand growth to slow to 930,000 barrels per day in 2024.
OPEC Plus countries have reduced oil production since 2022 to support the market, and reports indicate a decline in oil production last November, while Iran is increasing its production this year following its success in avoiding Washington’s sanctions, according to analysts.
