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By Francois de Beaupuy, Nayla Razzouk, and Francine Lacqua
TotalEnergies SE Chief Executive Officer Patrick Pouyanne said rising demand for oil will help to underpin prices, despite their recent slump on growing concerns about a global surplus.
Oil is on track for a yearly loss, with supply set to exceed demand both this year and next thanks to growth in production from the Organization of the Petroleum Exporting Countries and a host of non-member nations in the Americas. On Tuesday, benchmark crude prices in London and New York closed at their lowest levels in almost half a decade.
But Pouyanne expects the market to stabilize as US and OPEC producers work to avoid worsening the glut and as consumption climbs. Prices recovered Wednesday as President Donald Trump ordered a blockade of sanctioned oil tankers off Venezuela, while the White House readies new measures against Russia’s energy sector if Moscow rejects a peace deal with Ukraine.
“Demand continues to grow,” Pouyanne said in an interview with Bloomberg TV in Paris on Tuesday. “I trust also OPEC countries to manage the situation” for output, he said, adding that US shale producers will scale back on pumping if prices “are too low.”
Pouyanne’s view stands in contrast to the indications of weakness now proliferating across the oil market. Middle Eastern crude prices entered a bearish pattern known as contango early on Tuesday, where near-dated prices are cheaper than contracts for delivery further out in a sign of oversupply. The same pricing structure has already developed for some barrels sold on the US Gulf Coast.
Read More: Oil’s Middle Eastern Benchmark Grade Flashes Signs of Oversupply
Demand looks fragile, with easing premiums for fuels like gasoline and diesel signaling slower consumption.
Still, Pouyanne pointed to a longer outlook for why the market will start to pick up. The CEO of the French energy giant, which decided earlier this year to pare spending to adapt to lower prices, expressed confidence that crude will rebound as the industry isn’t investing enough on new projects.
LNG View
Meanwhile, Pouyanne was more negative on the prospects for the natural gas market. He said prices will probably drop in 2027 as a wave of new liquefied natural gas projects in Qatar and the US are due to come on stream.
Gas prices in Europe have recently hovered near the lowest levels since spring 2024, helped by mild temperatures, ample supplies, and renewed US efforts to broker peace in Ukraine. That comes even with the European Union set to impose a ban on all Russian LNG imports from January 2027. The world has so much supply that BloombergNEF forecasts that there will be a global surplus of LNG by the time the EU ban on Russian supply gets enforced.
Pouyanne said his company should be able to mitigate the drop in gas prices after reducing exposure to the spot market while increasing long-term contracts with Asian buyers.
TotalEnergies is mobilizing workers and contractors at its LNG project in Mozambique after halting construction for four years because of attacks in the region. The company has a view to start production by the end of 2028 or beginning of 2029, he said. It’s also still seeking to buy gas production assets in the US to strengthen its position as the top exporter of US LNG to Europe.
The French company has been bolstering its presence in the US in recent years as it pared down in Russia. It still maintains ties with Russia via stakes in gas producer Novatek and two LNG plants in the country. In 2022, it booked $14.8 billion of impairments and provisions tied to these assets in the wake of the war in Ukraine.
TotalEnergies also has exposure to Russia through its Netherlands Zeeland refinery, which it jointly owns with Lukoil PJSC. The Russian oil company faces US sanctions, and the US Treasury is holding talks with allies from Europe to the Middle East while navigating the complex unwind of Lukoil’s overseas operations.
TotalEnergies has reached an agreement with Lukoil under which the French company can fully operate the Zeeland refinery, Pouyanne told Bloomberg. If Lukoil ends up selling all of its international operations, TotalEnergies will consider whether to exercise its right to buy Lukoil’s 45% stake in the Dutch refinery, he said.
If peace between Russia and Ukraine is achieved and sanctions are eventually lifted, it will take time to see whether there is sustained stability, which means that the company wouldn’t “rush immediately” back to investing in the region, Pouyanne said.
Total, which last month agreed to buy stakes in European gas-fired power plants for €5.1 billion ($6 billion), could slow acquisitions if it needs to preserve cash next year, Pouyanne said. It’s still pressing ahead with its diversification into electricity, as the company just approved 3 gigawatts of battery storage projects in Germany, and a $1 billion investment to build a 1-gigawatt solar farm in Texas.
“The world is big — today we have shifted from Russia to the US, and this will be maintained,” he said.
— With assistance from Caroline Connan
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