The world will see its level of spare oil production capacity dwindle next year as jet fuel demand returns to pre- or near-pre-crisis levels, Amin Nasser, the chief executive of Saudi Aramco, said on Tuesday.
"The industry's spare capacity, currently at 3-4 million barrels per day (bpd) is providing some comfort to the market, however, my concern is that the buffer ... might diminish, especially next year when demand is expected to pick up further," Nasser said at the Nikkei Global Management Forum, as carried by Reuters.
An expected rise in jet fuel demand, which continues to lag the demand recovery in other fuels, will eliminate all spare capacity, according to the CEO of the world's largest oil exporter.
Little spare capacity amid continued underinvestment in oil and gas should be "a huge concern" for the market, Nasser said.
"Expanding capacity in our industry takes around 5-7 years, and there is not enough investment in the world to increase capacity, this is a huge concern," Nasser said.
Aramco's top executive affirmed the company's plan to raise its oil production capacity to 13 million bpd by 2027 from 12 million bpd now, reiterating that oil and gas demand will remain healthy for decades to come.
"Renewable energy can't yet meet the world's energy needs," Nasser said at the forum, carried by Bloomberg.
Aramco's CEO also reiterated the company's view that global oil demand would exceed 100 million bpd as early as next year.
At the end of last month, Nasser said that crude oil production capacity was dwindling globally, and more investments in new production are needed urgently.
"It's a huge concern," Nasser told Bloomberg, adding that "If there's aviation pick up next year, that spare capacity will be depleted. It's now getting to a situation where there's limited supply -- whatever is left that's spare is declining rapidly."
By Tsvetana Paraskova for Oilprice.com
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