Saudi Arabia's Oil and Energy Chief has warned that capacity in all energy sectors is decreasing and becoming ever more limited, as resources such as crude oil and natural gas are in higher demand amid the Russian invasion of Ukraine.
Speaking at a conference in the UAE's capital, Abu Dhabi today, the seasoned Saudi Energy Minister, Prince Abdulaziz bin Salman, stated that "I am a dinosaur, but I have never seen these things," referring to the recent sharp rise in prices for refined products. "The world needs to wake up to an existing reality. The world is running out of energy capacity at all levels," he added.
Those comments by the Prince and Minister echoed similar remarks he reportedly made yesterday, in which he stressed that a lack of investment in energy production and refining was leading to the rise in fuel prices. So far this year, the cost of crude oil has spiked by over 35 per cent to around $105 per barrel, apparently due to Russia's military offensive in Ukraine, which began over two months ago.
On the same panel, his Emirati counterpart, Suhail Al Mazrouei, also stated that without more investment in energy production across the globe, the Organisation of Petroleum Exporting Countries (OPEC+) would be unable to guarantee sufficient supplies of oil around the world when demand fully recovers after the Covid-19 pandemic.
Both Saudi Arabia and the UAE are included in the few oil producers investing in greater output of the resource, raising their overall crude capacity by 2 million barrels per day – spending billions in the process – and aiming to continue doing so by 2030.
According to Mazrouei, however, "the market is balanced" and there is not yet any shortage of oil nor any need for OPEC – of which Russia is a prominent member of and producer of oil – to accelerate its increase in production.
The Saudi and Emirati oil ministers also reiterated their resistance to the "politicisation" of the global oil market and insisted that geopolitics will not impact their decisions, referring to the war between Russia and Ukraine, as well as the efforts by the US to pressure Riyadh and Abu Dhabi into distancing themselves from Moscow.
Since Russia launched its official invasion of Ukraine, or "special operation", markets across the globe have been impacted by the conflict and its obstacles to global supply chains, with not only energy being affected and made costlier, but also food production and exports.
Other factors have also impacted supply chains and the energy market over the past few years, including the pandemic and, more currently, China's ongoing lockdown of key economic cities such as Shanghai.
Despite those obstacles, OPEC+ last week agreed to stick to only modest increases in oil output. Its Secretary General, Mohammad Barkindo, did say, however, that shortages in exports due to the marginalisation of Russian oil supplies "cannot be made up from elsewhere. The spare capacity just does not exist".