The global energy crisis will get worse if aviation and China put more pressure on an already under-invested sector, Aramco CEO says
- The world's biggest oil company warned the global energy crisis is poised to get even worse.
- "If the aviation industry picks up speed, you are going to have a major problem," Saudi Aramco CEO Amin Nasser told Reuters.
The world's biggest oil company warned Monday that the global energy crisis is poised to get even worse as demand from key sectors rebounds.
Oil producers worldwide have less than 2% of spare capacity that they can use to increase output, Saudi Aramco CEO Amin Nasser told Reuters on the sidelines of the World Economic Forum in Davos. Meanwhile, the aviation industry is still consuming 2.5 million barrels per day less than it was pre-COVID, he added.
"If the aviation industry picks up speed, you are going to have a major problem," Nasser said.
In addition, China is likely to come out of its current bout of COVID-19 lockdowns soon, returning global oil consumption to positive growth, he added.
Officials in Shanghai are already easing lockdown restrictions after seven weeks, aiming to return to normal life by June 1 in phases.
While Russia's invasion of Ukraine sent oil prices soaring and has moved Europe toward a full oil embargo on Moscow, Nasser made clear that the current energy crunch predates the war.
"What happened in Russia-Ukraine masked what would have happened," Nasser said. He added that Aramco's production capacity isn't going to expand quickly, backing earlier projections to hit 13 million bpd by 2027 from 12 million today.
The underlying problem is that an earlier focus on transitioning to green energy squeezed supplies, as oil companies grew hesitant to invest in long-term projects fearing that there wouldn't been enough demand for fossil fuels they pump in the future, he said.
"The pressure and the rhetoric is, 'don't invest, you will have stranded assets.' It makes difficult for CEOs to make investments," Nasser told Reuters.