ARKANSAS, Oct 4 (Future Headlines)- Global crude oil prices may soar to $100 a barrel following OPEC‘s decision this week to maintain supply cuts, according to Equinor’s Chief Economist, Eirik Waerness. While he doesn’t believe OPEC is specifically aiming for this price, Waerness noted that the oil market is currently relatively tight in terms of oil in storage and spare production capacity. OPEC’s decision not to increase output, combined with supply and demand dynamics, could drive prices higher.
The OPEC+ ministerial panel chose to maintain the group’s existing oil output policy, with both Saudi Arabia and Russia indicating their intention to continue voluntary supply cuts to support the market. While OPEC may prefer a price lower than $100 a barrel to avoid a collapse in oil demand, market forces could drive prices up.
Waerness made these remarks at the Baker Institute Center for Energy‘s annual energy summit. His comments align with the perspective of several oil executives who argue for continued investment in oil and gas to meet the growing energy demand, even as net-zero greenhouse gas targets come into focus.
However, he also acknowledged that oil demand is expected to peak by 2029, but economic growth will necessitate increased oil supplies for the next three to five years. This reflects the ongoing transition in the energy sector, where the world is gradually moving away from fossil fuels toward cleaner and more sustainable sources of energy.
It’s worth noting that the energy landscape is undergoing significant transformation, driven by efforts to combat climate change and reduce carbon emissions. Many countries and industries are working towards achieving net-zero greenhouse gas emissions by mid-century. In Europe, for instance, there is a growing focus on electrification, which could lead to a 70% reduction in carbon dioxide (CO2) emissions by 2050, according to Waerness.
While the oil industry continues to play a crucial role in meeting current energy demands, there is increasing recognition of the need to diversify energy sources and invest in renewable and clean technologies. As renewable energy becomes more accessible and cost-effective, it is expected to play a more prominent role in the global energy mix.
Equinor’s assessment of the potential for oil prices to reach $100 a barrel highlights the ongoing volatility and uncertainty in the oil market. Factors such as geopolitical tensions, supply disruptions, and changes in demand patterns can all influence oil prices. The decision by major oil-producing nations, including OPEC and non-OPEC members, to manage their output collectively can also have a significant impact on the market.
As the world transitions towards cleaner and more sustainable energy solutions, it will be crucial for both the oil industry and governments to adapt and plan for a future with reduced reliance on fossil fuels. Investments in renewable energy, energy efficiency, and innovative technologies will be essential to address the dual challenges of meeting energy demand and mitigating climate change.
Reporting by Moe Khaled; Editing by Sarah White