The head of the world’s largest oil company Aramco is worried about global crude supplies.
Current market dynamics such as China’s slowdown and an aviation sector that is still recovering from the Covid-19 pandemic have kept demand relatively subdued but say that is set to change soon.
Saudi Aramco CEO Amin Nasser fears the world may not have enough spare capacity to deal with that shift.
“For crude oil, we are in a situation where there is a spare capacity that is helping to mitigate interruptions,” Nasser told CNBC. “However, I am not so sure about the mid-to-long term, because as the spare capacity erodes, we will not be having the capability to mitigate any short or long term interruptions like what happened with Russia-Ukraine crisis.”
Aramco pumps about 10% of the world’s crude oil supply. It has a maximum capacity to pump 12 million barrels of crude per day, Nasser said, and are working on increasing that by a further million barrels per day.
Still, he says, “We should be worried about the mid to long term. I think there will be an issue in meeting the growing demand.”
The latest oil market report from the International Energy Agency which came out on Wednesday forecast global oil demand will increase by 1.9 million barrels per day in 2023 to reach a record 101.7 million barrels per day with nearly half of that coming from China.
The agency meanwhile expects oil supply growth to slow to 1 million barrels per day in the same period.
Writing by Tersoo Nicholas