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“There is a supply increase that’s come outside of OPEC+,” Auchincloss said. “We think that finishes in about February, March, April, and then it’s likely that we see flat to declining production after that time period outside of OPEC+.”
Future oil prices will depend on three factors: OPEC+ decisions, Chinese stockpiling and the impact of sanctions, Auchincloss said at the ADIPEC energy conference in Abu Dhabi.
“It’s a pretty serious sanctions environment right now, which is dampening supply,” he said. Despite short-term uncertainty, he remains optimistic about long-term demand, citing growth from aviation and petrochemicals.
The comments come after OPEC+ – a group of oil-producing nations including Saudi Arabia and Russia – on Sunday agreed a small oil output increase for December and a pause in increases in the first quarter of next year as the producers’ group moderates plans to regain market share due to rising fears of a supply glut. Oil prices have dropped about 13% this year.
Auchincloss said he sees a long-term case for investment in oil and the industry has to expand in places such as Abu Dhabi, Iraq and Libya to keep up with demand growth.
TotalEnergies CEO Patrick Pouyanne said annual oil demand growth was rising steadily at around 1%. He said China’s oil demand growth has slowed to around 300,000 from 600,000 barrels per day five years ago, but India is emerging as a new driver with 200,000 barrels per day in growth.
Both executives, who spoke on the same panel, emphasized the need for continued investment.
“OPEC is unwinding part of its capacity, so the quicker they unwind the quarter, the less they will have spare capacity,” Pouyanne said. “We could face a situation with a lower price, less investment, less spare capacity, and then prices will go up again.”
(Reporting by Yousef Saba, Jana Choukeir, America Hernandez, Stephanie Kelly and Shadia Nasralla; Editing by Louise Heavens and Susan Fenton)
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