Barkindo: No Shortage of Oil Despite Surging Prices

•Rystad predicts $240 oil if Russia/Ukraine crisis escalates

Emmanuel Addeh in Abuja

The Secretary General of the Organisation of Petroleum Exporting Countries (OPEC), Sanusi Barkindo, has said despite the surging crude oil prices, there’s no shortage of the commodity in the market.

Although oil prices in the futures markets have risen more than 30 per cent since Russia invaded Ukraine, Barkindo insisted that there’s “no physical shortage of oil.”

Barkindo stated that OPEC had decided last year to release the 5.8 million bpd, being the last tranche of the quantum of oil withdrawn from the market in the heat of the Covid-19 pandemic, reason it is gradually feeding the market with 400,000 barrels every month.

But he added that not all member countries are currently able to fulfil their obligations because of capacity constraints.

“Again, we go back to the issue of under-investment and it’s not only in the US or Europe. It’s globally and it requires a global solution,” he stated.

Stressing that OPEC remains friendly and apolitical, Barkindo said the organisation would continue to assist the market in maintaining stability.

On Monday, crude oil prices rose to $139 per barrel on the back of the conflict between the two countries.

Barkindo argued that the oil producers’ group has no control over current global events, explaining that geopolitics was dictating the pace of the market.

“We are facing what is likely to be a global game changer in terms of the energy transition,” he maintained.

The Secretary General added: “It is important to keep communication lines open, especially in times of crisis like the one the world is facing today. All we can do is to stay the course

“I have heard from several speakers here at CERAweek that current tightness in the market condition might be creating some demand destruction.

“Even as that might be the case, the other side of the equation is probably more critical at the moment, which is supply is increasingly lagging behind.”

Meanwhile, Brent crude futures could surge to $240 a barrel this summer if Western countries continue to sanction Russian oil exports, industry consultants, Rystad Energy has predicted.

Wider sanctions on Russian oil would create a 4.3 million barrel a day hole that “cannot simply be replaced by other sources of supply,” Rystad Energy’s head of oil markets, Bjornar Tonhaugen, wrote in a note.

“The supply collapse would be the largest potential oil supply shortage since the 1990 Gulf War, when oil prices doubled, he said.

The higher prices rise, the higher the “chances of the global economy entering a recession” in the fourth quarter, according to Tonhaugen, quoted by Bloomberg.

“Oil at $240 per barrel would trigger a global recession and self-destruct the price level within just a few months, after which prices would fall sharply,” the firm said.