The oil industry is not investing enough to meet growing energy demand, including for crude, which could lead to a series of energy crunches down the road, oil expert Daniel Yergin, vice chairman of IHS Markit, told CNBC on Monday.
“I think we should be conscious that one of the things we may see is a series of crunches,” Yergin told CNBC, referring to what he dubbed a “pre-emptive underinvestment” in oil supply while global demand continues to rise.
“World demand is going to be back where it was in 2019 in the next few months,” the expert said, adding that there is a “disconnect between the realities of the dynamics of the market” and the calls from investors for the oil industry to stick to capital discipline.
Yergin is the latest industry expert warning of future energy crunches as the world is not investing enough in meeting the still growing demand for oil and gas.
Industry executives have been warning this year of the underinvestment in traditional energy supply.
The oil industry is “massively underinvesting” in supply to meet growing demand, which is set to return to pre-COVID levels as soon as the end of 2021 or early 2022, Greg Hill, president of U.S. oil producer Hess Corp, said at the end of September.
The rebound in global demand for oil and gas and the gap between supply and demand could lead to a new supercycle for oil and gas, Rosneft’s chief executive Igor Sechin said on Friday.
At the end of last month, Saudi Aramco’s chief executive Amin Nasser said that crude oil production capacity was dwindling globally, and more investments in new production are needed urgently.
Last week, Nasser said that the world would see its level of spare oil production capacity dwindle next year as jet fuel demand returns to pre- or near-pre-crisis levels.
By Tsvetana Paraskova for Oilprice.com
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