Recently-elected President of the Organisation of Petroleum Exporting Countries (OPEC) Mohammed Bin Saleh Al-Sada expects to see oil demand rise by the end of this year.
According to the executive, who is also Qatar’s Minister of Energy and Industry, the recent decline in oil prices and the current market volatility are simply temporary.
“Higher oil demand is expected in the third and fourth quarters,” Al-Sada said according to a statement released by OPEC.
Low Oil Prices are Temporary, OPEC Boss Says
Al-Sada added that, since February this year, oil prices had seen a steady improvement following a decline in output, supply outages and a decrease in stock.
During the same period, he explained, the global demand for oil saw a significant improvement. However, al-Sada explains, this is only a temporary situation.
“These are more of an outcome resulting from weaker refinery margins, inventory overhand – particularly of product stocks, timing of Brexit and its impact on the financial futures markets, including that of crude oil,” he said.
Oil Demand Expect To Rise By Year-End
The minister added that, as the economies of the main oil consumers improve, there should be an increase in oil demand over the next quarters.
This expectation of a higher demand has led analysts to believe that oil prices are bound to rise during the last quarter of this year, he stated.
Al-Sada explained further that investment is necessary to meet this expected growth in demand, but also to fight against the natural decline in oil production.
“He alluded to the expected decline in the oil supply vis-à-vis the demand and tightening of the markets in the period ahead, due to the unprecedented drop in capital expenditure in the oil & gas projects across the globe during 2015 and 2016,” the OPEC statement reads.
This is expected to lead to a “curtailment of investments which were scheduled to be undertaken over the next four years”, it adds.