- OPEC's new secretary-general said the cartel can't be blamed for high oil and gas prices.
- Underinvestment in the industry broadly is to blame for surging prices.
- "This is the harsh reality that people have to wake up to and policymakers have to wake up to," the cartel's new chief said.
OPEC's new secretary-general said the cartel can't be blamed for high oil and gas prices, and that the real problem is one of underinvestment in production across the entire industry.
Prices have slipped in recent weeks but but remain volatile, while European sanctions on Russian oil products are set to kick in by the end-of-the year, threatening another surge in prices. The sanctions will take another 2.2 million barrels a day off the global energy market, experts say, which could drive prices as high as $120 a barrel, especially if Western nations have trouble replacing that supply.
World leaders have implored the cartel of oil producing states to increase output and help meet demand. In July, President Joe Biden traveled to Saudi Arabia to secure a supply increase, but left mostly empty handed.
Yet, the cartel's new leader, Haitham Al Ghais, says OPEC+ is not to blame for the energy crisis facing the world.
"OPEC is not behind this price increase," Al Ghais said in an interview with CNBC. "There are other factors beyond OPEC that are really behind the spike we have seen in gas [and] oil. And again, I think in a nutshell, for me, it is underinvestment – chronic underinvestment," Al Ghais added.
Other experts in the industry have made similar observations, noting that many OPEC+ countries are at full capacity in terms of production, storage, and refining , and that US firms are feeling the same pressures. Goldman Sachs analyst Michele Della Vigna estimates OPEC+ has a remaining capacity of roughly 1 million barrels per day, the smallest in about 20 years.
And there's no quick fix to the problem. According to Exxon Mobile CEO Darren Woods, it takes three to five years for investments in the energy sector to result in a significant increase in output and global supply.
Although high inflation and recession fears have led OPEC to cut its forecasts for oil demand, the world is still gripped by the volatility in energy markets. Europe in particular is bearing the brunt of the crisis and preparing for tougher days ahead as Russian gas supplies dwindle ahead of the coming winter.
But a solution is outside of OPEC's hands, the cartel says.
"This is the harsh reality that people have to wake up to and policymakers have to wake up to. Once that is realized I think then we can start to think of a solution here," Al Ghais said. "OPEC has a solution: invest, invest, invest."