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Rashid Husain SyedIndustry and environmentalists are on a clash course.

The 23rd World Petroleum Congress in Houston last week was enough to highlight the emerging trends, complexities and challenges faced by the oil and gas industry.

The message from the industry was clear – a global oil scarcity is on the horizon. Underinvestment since oil prices began to slide from their US$100 heyday in 2014 is extracting a cost.

“For the first time in a long time, we’ll see a buyer looking for a barrel of oil as opposed to a barrel of oil looking for a buyer,” Bloomberg quoted Halliburton CEO Jeff Miller as saying.

Oil prices could move “a lot higher” from current levels given the world’s deep reliance on fossil fuels and may hit US$150, warned Christopher Wood of the investment bank Jefferies. “In a world that reopens – which is a big ‘if’ – the oil price can go significantly higher,” Wood, global head of equity strategy at the investment bank, told CNBC’s Street Signs Asia on Wednesday.

If “oil gets over $80 with a lot of Asia closed,” and China’s borders effectively still closed, “in a really, fully reopened world, the oil price could go to $150,” he said.

The “political attack” on fossil fuels in recent years has removed the incentive for investment in the sector despite its lingering importance, he added. He noted that 84 percent of the world’s energy demand last year was met by fossil fuels. Nobody is investing in oil, yet the world still consumes fossil fuels.

JPMorgan Chase officials believe “$80 oil is still cheap.” A vibrant global economy means robust oil demand, and then crude oil prices could soar to US$125 per barrel in 2022 and US$150 in 2023.

Echoing the sentiments expressed at the congress, Chevron chief executive Mike Wirth candidly said: “Our products make the world run.”

Irina Slav, writing for, noted that Europe is struggling with record gas prices. And yet its gas inventories are being depleted at the fastest rate in about a decade because of a colder-than-usual start to winter across much of the continent.

In the United States, gasoline prices have become a top priority for an administration that came to power with the promise to reduce the country’s consumption of fossil fuels.

“I understand that publicly admitting that oil and gas will play an essential and significant role during the transition and beyond will be hard for some,” Aramco chief executive Amin Nasser said at the congress. “But admitting this reality will be far easier than dealing with energy insecurity, rampant inflation and social unrest as the prices become intolerably high and seeing net-zero commitments by countries start to unravel,” the Financial Times quoted him as saying.

Price shocks, scarcity and energy poverty are in the cards after two consecutive years of underinvestment in the oil and gas industry, reports IHS Markit. This year’s investments in the industry will be about US$341 billion, some 23 percent lower than pre-pandemic investment levels of US$525 billion. And that’s despite rising global demand for the commodities.

“Underinvesting in oil and gas before renewables and other low-carbon technologies that are ready to scale up to meet energy demand could create recurrent energy crises of the kind we saw in Asia and Europe over the last few months,” said IHS Markit vice-chairman Daniel Yergin.

Click here to downloadSimilarly, the “energy crisis in Europe and Asia this winter is a preview of what we can expect in the years ahead,” the secretary-general of the Saudi Arabia-based International Energy Forum told Upstream Online.

But not everyone seems convinced.

“We don’t see a shortage at the moment,” Lorenzo Simonelli, chief executive officer of Baker Hughes, the world’s No. 2 oilfield contractor, said on Tuesday in an interview at the congress. “We’ll see how the demand continues to improve, but I do see countries such as Saudi Arabia and also UAE having the ability to increase their production.”

And despite speculation about a brewing supply crisis, at least three refiners in Asia aren’t seeking any extra Saudi crude for January loading, Bloomberg reported, quoting Aramco officials.

At the recent COP26 summit in Glasgow, the emphasis remained on meeting emission targets – at any cost.

Is that achievable?

The jury is out.

Toronto-based Rashid Husain Syed is a respected energy and political analyst. The Middle East is his area of focus. As well as writing for major local and global newspapers, Rashid is also a regular speaker at major international conferences. He has been asked to provide his perspective on global energy issues by both the Department of Energy in Washington and the International Energy Agency in Paris. For interview requests, click here.

The opinions expressed by our columnists and contributors are theirs alone and do not inherently or expressly reflect the views of our publication.

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