Aramco expects oil demand to rebound to pre-pandemic levels by 2022 while supply tightens, creating a deficit, the chief executive of the Saudi state energy giant told Energy Intelligence.
China is once again the focus of attention. According to Amin Nasser, it will account for most of the rebound, along with other developing countries in East Asia and other parts of the world.
On the supply side, however, Nasser warned that spending cuts could create a shortage, and it won't be a short-term affair.
"Yes, there is a concern that we might end up with a supply crunch over the mid to long term if this level of investment is not corrected looking forward," the executive told Energy Intelligence's Amena Bakr. The industry has cut about a third of its spending from last year's level.
The interview came out on the same day that OPEC revised down its 2021 oil demand forecast, now expecting a slower rebound than in earlier forecasts, the cartel said in its monthly report on oil markets.
According to the latest estimates, oil demand will average 96.84 million bpd next year, a downward revision of 80,000 bpd from September. OPEC attributed the revision to slower economic recovery across the members of the Organisation for Economic Co-operation and Development (OECD) as well as non-OECD countries. Even with the revision, however, 2021 demand would be 6.5 million bpd higher than 2020's.
The International Energy Agency is less optimistic. In its latest Oil Market Report, the authority said it expected an increase of 5.5 million bpd in oil demand next year but to a higher total than OPEC's, at 97.2 million. The agency, however, warned that the effect the pandemic had on global oil consumption would be a long-term one. In that regard, it differs from Nasser's belief that the worst for the oil industry is now over.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More