Despite escalating geopolitical tensions and the resulting economic slowdown, global oil demand is expected to increase by 2.3 million barrels per day in 2023, a top official from the Organization of Arab Petroleum Exporting Countries told Independent Arabia.
Jamal Al-Loughani, the recently appointed secretary-general of the organization, based his optimistic outlook on the recovering demand from members of the OECD, as well as China, and India.
He did warn though that global developments will have an impact on the overall growth of the oil sector, as central banks around the world are increasing interest rates to tame rising inflation.
Speaking to journalist Ghaleb Darwich, Al-Loughani said the imbalances created as a result of the Russia-Ukraine conflict continue to recede and the tightening of monetary policies by most central banks is expected to pay off.
Commenting on the move by some countries to withdraw crude from their respective reserves to strike a balance between supply and demand in the oil market, the secretary-general said this strategy may not prove to be very effective in the long run, as ultimately they need to be replenished.
Echoing views expressed by most major oil exporters, the official stressed the need for investment in the oil sector to ensure energy security in the future.
Al-Loughani said the growing geopolitical tensions in Eastern Europe and the related decisions will undoubtedly affect the foundations of the global oil market in terms of demand and supply, which may lead to an increased intervention by EU countries and their allies.
Referring to the price cap on Russian crude, the secretary-general said that it led the Kremlin to cut its production by 500,000 bpd.
He warned such tit-for-tat moves will only deplete strategic reserves — further tightening the market.
The OAPEC official said Saudi Arabia is working hard to support the stability of the oil market, which is necessary to achieve sustainable growth of the global economy.
He said the issue of insufficient investments in the global oil sector continues to pose a threat to future energy security and has led to a slowdown in the growth of oil reserves, due to a lack of exploration and production activities.
Al-Loughani also highlighted the insistence of various European countries and members of the International Energy Agency to reduce the consumption of fossil fuels to cut carbon emissions.
The official said it should be understood that fossil fuels can be used as part of the solution to mitigate the effects of climate change.
A large number of Arab countries are focusing on renewable energy, he said, adding that Saudi Arabia, being the largest oil-producing country, is at the forefront of the clean-energy efforts.
Al-Loughani said the Kingdom has launched the Saudi Green Initiative to achieve net-zero goals and is a pioneer in adopting the concept of a circular carbon economy.
To accelerate the pace of sustainable development and protect the global climate, he added, Riyadh seeks to diversify its energy mix by producing 50 percent electricity using renewable sources by 2030 — thus significantly reducing carbon emissions.
He also cited the Middle East Green Initiative as an example of Saudi Arabia seeking to ensure the region achieves the goal of reducing emissions.