Saudi Aramco’s CEO, Amin Nasser, warns of a global oil shortage if the industry fails to invest. 

He calls for renewed exploration and production, noting that current investment levels are “extremely low.” Nasser emphasizes that the shale boom, which supplied the world with oil for over a decade, is unlikely to be repeated, and that new projects typically take five to seven years to come online. He also highlights that only a quarter of annual oil consumption is being replaced by new discoveries, with demand from emerging markets, particularly Asia, driving consumption.

The International Energy Agency forecasts oil use to peak before the end of the decade, but Aramco and other OPEC producers dispute this, predicting steady demand through the 2030s. Nasser argues that while the world needs to transition to clean energy, it cannot abandon oil, emphasizing the need for efficient and low-emission production. He warns that underinvestment could lead to supply shortages, causing economic disruptions and higher prices.

Oil prices remain around $80-90 per barrel, supported by OPEC+ supply management. However, spare capacity is narrowing, making the market vulnerable to shocks. The global investment community is divided on whether to prioritize clean energy or maintain conventional oil investments. Nasser’s comments reflect Saudi Arabia’s strategy of balancing energy security with transition, emphasizing an orderly shift away from fossil fuels.

Nasser’s warning is significant as years of underinvestment and political resistance to new projects have weakened the supply pipeline. Governments face a dilemma: how to invest in conventional fuels without undermining climate goals. Nasser suggests that failing to invest adequately could lead to a gap between perception and reality, resulting in supply destruction rather than demand destruction.

/FT, IEA/