Qatar’s Energy Minister, Mohammed al-Sada, has called on the Organization of the Petroleum Exporting Countries (OPEC) and its allies to maintain oil supply curbs to guarantee healthy price levels.
It is expected that reasonable oil prices will in turn, allow increased investment in the industry and help avoid a big supply and price shock in the long run.
Sada told Reuters he also supported the idea of creating a permanent platform for OPEC’s cooperation with Russia even after the current round of joint oil supply cuts ends.
“There is a clear recovery in oil prices. But it has not been met with an increase in investments which have been very low.
“My concern is that medium- to long-term demand is met comfortably. Investors are still cautious and over-conservative,” he said in an interview.
Sada said that global oil demand was set to rise by at least 1.5 million barrels per day a year or by a healthy 1.5 percent.
But the global oil investment purse of around $400 billion was still too small to guarantee the required level of investment to replace production from mature fields and the launch of new projects.
“I would see the need to keep the (OPEC cooperation) momentum. We need to restore investments; it could take months. OPEC could start being concerned about gross over-tightening,” Sada added.
OPEC and its allies led by Russia have reduced production since the start of 2017 to ease a global oil glut stemming from the U.S. shale oil boom that saw oil prices crashing to below $30 per barrel and investment in the oil sector falling by over $1 trillion in the past three years.
The organisation’s production restraints have helped cut global oil stocks in industrialized nations from as high as 350 million barrels to as low as 50 million barrels, Sada said.
The tightening of the market propelled oil prices above $70 per barrel this year but also encouraged U.S. shale oil drillers to increase investments and return to record production growth.
Sada said, “Even with shale, the market is heading for balance.”