CEOs say crude oil will stay high amid tight supply

  • Oil prices will continue to rise as production curbs look to keep crude supplies tight, according to the world’s biggest energy giants.
  • “There is more upside than downside when it comes to the price of oil,” said the Shell CEO.
  • “Obviously, in order to bring prices down, the industry needs to ramp up investment and keep pace with demand recovering. Unfortunately, this will take time,” said Exxon’s CEO.

Oil prices will continue to rise as production curbs look to keep crude supplies tight, according to the chief executives of the world’s largest energy giants.

This will maintain huge profits in the oil companies, as reports of the second quarter earnings so far have shown record returns for the sector. Although oil prices have seen a downward trend in the past few months due to recession fears, crude oil has seen a rally over the past week and West Texas Intermediate is still up more than 30% for the year.

“There is more upside than downside when it comes to the price of oil,” Shell CEO Ben van Beurden said in an interview Thursday with Bloomberg TV after his company’s quarterly report. “Demand has not fully recovered yet, and supply is certainly tight.”

He pointed out that OPEC and American shale oil companies have a limited ability to produce additional oil, while Western sanctions on Russian oil have not yet been fully implemented. The partial EU embargo will come into effect by the end of the year, potentially removing another 2.2 million barrels of oil. market.

TotalEnergies CEO Patrick Pouyanne said Thursday that global markets will struggle to develop spare production capacity for oil and liquefied natural gas next year.

“This means medium-term support for higher prices,” he said on a conference call.

Darren Woods, ExxonMobil CEO, also pointed to production constraints as oil price forecasts were raised on Friday.

It takes about three to five years for the investments to translate into additional exposure, He told CNBC. Meanwhile, there are still no signs of significant destruction in fuel demand.

“Obviously in order to bring prices down, the industry needs to ramp up investment and keep up with the recovery in demand. Unfortunately, that will take some time,” Wood said on an earnings conference call on Friday.

Ryan Lance, CEO of ConocoPhillips, also told an industry group earlier this month that OPEC and US producers are limited in the amount of oil they can pump.

According to Reuters, he said, “Eventually, demand will return to pre-pandemic levels.” “There is a supply crunch coming.”

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