15 October 2012 13:54 [Source: ICIS news]
LONDON (ICIS)--Oil prices are likely to remain resilient, despite increasing global fossil fuel supplies and downward pressure on demand, the CEO of oil giant Saudi Aramco said in remarks released on Monday.
In a speech made to the Oxford Energy Seminar on 20 September but made public today, Saudi Aramco CEO Khalid al-Falih said that widely-expected increases in oil demand have failed to materialise as a result of the financial crisis, vehicle efficiency regulations, and increasing fuel supplies, but that a collapse in oil prices remains unlikely.
He said: “Our industry now faces downward pressure on demand; supply abundance; a slowdown in the deployment of renewables; and reduced momentum on climate change legislation.
“It doesn’t mean our industry is in bad shape or that prices are going to collapse, but that’s a profoundly altered world energy landscape from the one we faced a decade, or even just a few years, ago,” Al-Falih added.
The “paradigm shift” for the global energy sector has resulted in oil demand growth slowing to the most sluggish levels it has been at for decades, at 850,000 bbl/day, according to Al-Falih, who noted that 20% of the demand growth was a result of nuclear power outages in Japan.
“[Oil] demand this year is expected to increase by only a modest 850,000 bbl/day, or less than 1%, whereas growth averaged more than 2.3% between 1965 and 2010,” he said.
Al-Falih estimated that global proven oil reserves have increased by 200bn bbl, the equivalent of “discovering a new Kuwait and UAE [United Arab Emirates] combined”.
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