TheCable

Amin Nasser, chief executive officer, Saudi Arabian Oil Company (Aramco) has warned that oil prices could quickly spike again  as producing nations face “extremely low” spare capacity.

Nesser, who said this at a recent conference in London, gave a dire warning over the ‘extremely low’ capacity of countries to produce crude oil.

Spare capacity is the volume of production that can be brought on within 30 days and sustained for at least 90 days.

Historically, Aramco is said to have had the “greatest” spare capacity.

Also the world’s largest oil producer, the company had in August, announced a net income increase by 90 percent to $87.9 billion in the first half (H1) of 2022, compared to $47.2 billion in H1 2021.

Last week, oil prices jumped to $95.87 after health authorities in China eased COVID-19 restrictions.

But, according to Nesser, the global oil market remains tight and that “does not bode well for a world that still relies heavily on fossil fuels.”

He warned that the oil prices could quickly jump soon.

“Today there is spare capacity that is extremely low, if China opens up, the economy starts improving or the aviation industry starts asking for more jet fuel, you will erode this spare capacity,” he said.

“When you erode that spare capacity the world should be worried. There will be no space for any hiccup — any interruption, any unforeseen events anywhere around the world.”

Meanwhile, the Organisation of Petroleum Exporting Countries (OPEC) said there will be a cut in its global oil demand growth forecast for 2023 over fears of global economic recession.

Also, last month, the US pressured the organisation to suspend its plans for a deep cut after OPEC, in its report, said the oil demand growth for 2022 and 2023 forecasts a cut in production by 100,000 barrels per day (bpd).