Though lower international oil prices over the past two years have led to a drop in sector investments, conditions for higher prices in the next few years are gradually ripening, according to Amin Nasser, president and chief executive officer of Saudi Arabian oil company Saudi Aramco.
Highlighting the subdued activity of recent times, Nasser, in comments reported by Bloomberg, noted that investments in the oil sector plummeted by one trillion dollars between 2014 and the present.
New production capacity and investment needed in the future are lagging, Nasser told an event at Columbia University in New York.
“While the short-term market is pointing to a surplus of oil, the supply required in the coming years is falling behind,” he noted.
Nasser forecast that a production level of 20 million barrels per day will be needed to cover increasing oil demand and offset shortages prompted by depleted older reserves.
New investments being made are primarily small-scale, short-term moves and therefore will not cover future production needs, Nasser noted.
The Saudi Aramco head said his company forecasts a continual rise in demand during 2018 and 2019, contrary to the current year, for which the International Energy Agency (IEA) expects a slowdown.