Global oil supplies will remain tight for years, putting upward pressure on energy prices, Exxon's Chief Executive Officer Darren Woods said on Friday.
"The industry is still recovering from the impact of the pandemic and the lower levels of capital that have been going in across the industry to offset the depletion that's been happening," Woods told Bloomberg TV, adding that supplies were "fairly tight."
For the next couple of years, oil demand will outstrip supply, particularly as OPEC continues its production cuts, said Woods, and it will "take time to get additional capacity coming on." Oil demand hinges on the state of the global economy, with Woods saying that the U.S. economy is in "reasonably good shape," with China slowly emerging from the pandemic.
A rash of oil demand forecasts and outlooks have emerged over the last month, with the IEA predicting earlier this week that crude oil, natural gas, and coal would all peak before 2030. OPEC's view is in stark contrast to the IEA's World Energy Outlook predictions, left its oil demand growth forecast unchanged this month despite economic uncertainty, predicting a 2.4 million bpd rise this year and a 2.2 million bpd rise next year amid an improving Chinese economy.
The two U.S. supermajors Exxon and Chevron told the markets what they thought of future oil demand when both companies embarked on $50B+ acquisitions of Pioneer and Hess, not letting the IEA's demand predictions dissuade them from moving forward with plans to expand.
Through its Pioneer deal, Exxon will effectively double its Permian production to more than 1.3 million bpd, with aspirations to increase that to more than 2 million bpd by 2027-an action unlikely to be taken unless the company was a true believer that the demand outlook was rosier than the one the IEA has described.
By Julianne Geiger for Oilprice.com
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More