Asia will lead oil demand growth of around 2 million barrels per day (bpd) in the second half of the year, a senior executive at Vitol said on Monday, an increase that could potentially lead to a shortage of supply and drive up prices.
International benchmark Brent crude has fallen to around US$75 (about RM340) a barrel from a peak of nearly US$140 in March last year, just after the disruption caused by oil producer Russia's invasion of Ukraine.
Prices have drawn support from surprise voluntary output cuts by some members of the Organization of the Petroleum Exporting Countries and allies, including Russia (Opec+) announced in April. The group meets again on June 4 to review output policy.
"We are going into the second half of the year where, largely thanks to Asian demand growth, the world is going to need about 2 million bpd more than it needs now," Mike Muller, Vitol Asia president, told the Middle East Petroleum & Gas Conference in Dubai.
"For those of you asking whether Opec+ needs to take more off the market or not, I will then let you draw your own conclusions," he said.
Muller's view echoes remarks from the International Energy Agency, which shortly after Opec+ announced its output cut in April, said the producer group risked exacerbating an oil supply deficit expected in the second half of the year.
Also speaking at the Dubai conference, Fereidun Fesharaki, chairman of the FGE energy consultancy said the world could face a supply problem as Western sanctions on Russian oil curtail production growth if demand growth rises as predicted.
Russia can maintain production at around 10 million to 11 million bpd, he said, but would be unable to contribute sufficiently to ensure 2 million bpd of future growth given Western sanctions imposed on Russia following its invasion of Ukraine.
Fesharaki said he saw OPEC behaving very differently from when US shale oil was its main threat and the grouping sought to limit price growth to discourage expensive shale projects from coming online.
Now he said Opec would seek to monetise oil resources before demand for fossil fuel peaks as many countries shift towards low carbon energy.
Fesharaki said he saw "a desire to keep oil prices above US$80 a barrel and a willingness to go over US$100 if the market tightens".
Opec Secretary General Haitham Al Ghais, who attended the event, did not discuss the short term, but reiterated a warning that underinvestment in the oil and gas sector in the long term could cause market volatility.
He also said the world needs to focus on reducing green house gas emissions rather than replacing one form of energy with another, and that major investments were needed in all energy sectors.
"That is the truth that needs to be spoken," Al Ghais said.