London — A recent oil-price slide reflects fears of economic slowdown and masks physical market fundamentals, OPEC’s new secretary general told Reuters, as he took a relatively optimistic view on the outlook for 2023 as the world tackles rising inflation.
Haitham al-Ghais, who took office on Aug. 1, said oil demand was robust in the physical market, concern of Chinese economic slowdown was exaggerated, and demand was likely to find support from jet fuel use as people travel more.
The price of Brent crude came close to an all-time high of $147 a barrel in March after Russia’s invasion of Ukraine exacerbated supply concerns. Prices have since declined and hit a six-month low below $92 this week.
“There is a lot of fear,” Al Ghais said in an online interview. “There is a lot of speculation and anxiety, and that’s what’s predominantly driving the drop in prices.”
“Whereas in the physical market we see things much differently. Demand is still robust. We still feel very bullish on demand and very optimistic on demand for the rest of this year.”
“The fears about China are really taken out of proportion in my view,” said Al Ghais, who worked in China for four years earlier in his career. “China is a phenomenal place of economic growth still.”
The Organization of the Petroleum Exporting Countries, Russia and other allies, known as OPEC+, has unwound record oil-output cuts made in 2020 at the height of the pandemic and in September is raising oil output by 100,000 barrels per day.
Ahead of the next meeting of OPEC+ holds on Sept. 5, Al Ghais said it was premature to say what OPEC+ will decide, although he was positive about the outlook for next year.
“I want to be very clear about it – we could cut production, if necessary, we could add production if necessary.”
“It all depends on how things unfold. But we are still optimistic, as I said. We do see a slowdown in 2023 in demand growth, but it should not be worse than what we’ve had historically.”
“Yes, I am relatively optimistic,” he added of the 2023 outlook. “I think the world is dealing with the economic pressures of inflation in a very good way.”
*Alex Lawler, Rowena Edwards, Dmitry Zhdannikov, Maha El Dahan & Olesya Astakhova, editing: Veronica Brown & Barbara Lewis – Reuters
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