Muhammad Suleiman Al-Ankari
There are dozens of reports published daily on the energy sector globally from expert houses, major banks and financial institutions, most focusing on oil prices and their future in the short and medium term. Over the past five years, most of them have been governed by apparent contradictions in price trends, and there may be relative justifications, as part of the most significant impact on price is the sanctions imposed on Russia, the largest because of its war on Ukraine. It is one of the leading oil producers and exporters. The oil industry and its future is one that is striking, at a time when many of these international banks are expecting the end of the oil age and its decline in use and the possibility of its price falling below $50 within a few years from our current history. Were were Some even expected that this phase would begin in 2020, but the opposite happened, after a sharp drop in oil demand as a result of a short-term large shutdown due to the corona pandemic in the global economy, demand It reached pre-pandemic levels, then came the Ukraine war to ignite prices over fears of supply shortages, then imbalances in the energy mix between major consumers in Europe and the US and their energy Started talking about the need to rethink strategies. and structure.
With these quick events, much of the expectation has been lost between political influences and the basic economic factors that have the longest impact on oil prices and the future of its industry. At a time when one of the major banks gives you several scenarios in one report and expects a fall in prices because it assumes that a possible slowdown in the growth of the global economy will result in a fall in demand. It also holds the potential for higher prices if sanctions on Russia regarding its oil exports are expanded. This may be logical, but if it is ignored that global surplus production capacity is less than the growth of demand in the medium and long term, and if the world returns to accelerate and increase the rate of economic growth, and It is expected, once the inflation file is addressed, that the disruption of supply chains in the first place will result in the shock of growth in demand for energy in general and oil in particular, as it undermines the professionalism of those reports. Is. You see oil prices with no direction but to rise, because they also largely focus on news and numbers filtered from political rooms and battlefields in the war between Russia and Ukraine, and those prices puts that are far from current levels, with some reaching as high as $380 a barrel in the case of Russian oil and gas. Supply to Europe stopped. The future of the market and for years to come, regardless of the economic fundamentals that govern it.
But factors that can be considered in the reality of the oil market are the declaration of OPEC countries, which have proven their correctness and accuracy, and years ago about the danger of declining investment in oil and gas exploration and production. was warned. , which is an approach adopted especially by Western countries, which led to the reluctance of their oil companies to invest in fossil fuels, and they declined. With this, the investment is about 40 percent of what is needed to hold more than the supply globally. Demand. With regard to continuing expectations about oil prices, what emerges in the media arena is the voices of independent individual analysts, most of whom are not devoid of their own will and facts, and some of them, especially analysts from Arabs. The original publishes its expectations and readings in both Arabic and English and finds apparent contradictions in what it expresses in both languages. In Arabic, you find that this specifically raises the outlook of OPEC and the Gulf countries to the oil industry and that prices will remain high, while in English, he addresses the speakers of those who live among them. I want it to fall. Oil prices, and many of them were certain that oil prices would never exceed a hundred dollars and that had simply become a thing of the past. The market disagreed with them and prices were rising to this level before the Russo-Ukraine war broke out. A result of fundamental factors. Price movement has a significant negative impact on the business sector, which can enter a cycle of confusion in estimating energy costs, especially if its derivatives and products are at the center of their production inputs. from expectations.
In the oil industry and its future, the best people you can read about are investors from major oil and gas producing countries. They are the ones who invest huge money to increase their production capacity. They would only take these steps with a realistic view. Estimates of growth in demand, consumption volumes and global need, and their financiers will not agree to their funding requests unless an accurate study of the future of the global economy and growth in demand for goods, the most important of which is energy. The warnings from OPEC members to oil producing countries are what have proved to be true and what the world is experiencing and realizing its danger is that there will be a large percentage increase in oil demand and supply growth after 2040. The lack of such a very perfect fit could make prices higher for longer rather than months with the potential for price volatility, but the trend would remain upward.