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Saudi Arabia Predicts Oil Shortage
Saudi Arabia tells a conference in London the world is headed for a petroleum shortage and higher oil prices because the past two years of glut caused producers to cut back on spending to add capacity.
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Saudi Arabia tells a conference in London the world is headed for a petroleum shortage and higher oil prices because the past two years of glut caused producers to cut back on spending to add capacity.
The comment comes after the Organization of the Petroleum Exporting Countries agreed after many months of debate to trim its output by 1%-2%. The cartel won’t decide details about the proposed reduction until it meets on Nov. 30.
The price of a barrel of crude oil plummeted to around $28 per barrel earlier this year from $114 in 2014. Scottish energy consultants Wood Mackenzie estimates the oil industry cut its capital spending by $1 trillion over the same period, according to The Wall Street Journal.
Saudi Arabia’s oil minister didn’t say when he expects the shortage to come. And ExxonMobil CEO Rex Tillerson, speaking at the same conference, doubts that soaring oil prices lie ahead. He points to large inventories of stored oil and ample oil shall capacity in North America, both of which could act to keep crude oil prices down.
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