OPEC not to blame for soaring inflation

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New OPEC Secretary General Haitham Al Ghais said on Wednesday that the influential producer group is not responsible for soaring inflation, instead pointing the finger at chronic underinvestment in the oil and gas industry.

“OPEC is not behind this price hike,” Al Ghais told CNBC’s Hadley Gamble.

“There are factors other than OPEC that are really behind the spike we’ve seen in gas” [and] in oil. And again, I think in a nutshell, for me it’s underinvestment — chronic underinvestment,” he added.

“This is the harsh reality that people need to wake up to and policy makers need to wake up to. Once that’s realized, I think we can come up with a solution here. And the solution is very clear. OPEC has a solution: invest , invest, invest,” said Al Ghais.

Earlier this year, Kuwaiti Al Ghais was appointed OPEC secretary general for a three-year term. He succeeds Nigerian oil industry veteran Mohammad Barkindo, who died last month at age 63, just days before he was due to leave the organization.

The International Energy Agency said in June that global energy investment is on track to grow 8% this year to $2.4 trillion, with most of the expected increase coming mainly in clean energy.

It described the findings as “encouraging” but warned that investment levels were still far from enough to address the many dimensions of the energy crisis.

For oil and gas, the IEA said investment is up 10% from last year but remains “well below” 2019 levels. It said current high fossil fuel prices present “a once-in-a-generation opportunity” for oil and gas-dependent economies to undergo much-needed transformation.

The IEA has previously said investors should not fund new oil, gas and coal supply projects if the world is to achieve net-zero emissions by the middle of the century.

Certainly, the burning of fossil fuels, such as oil, gas and coal, is the main cause of the climate emergency.

UN Secretary-General Antonio Guterres warned in April that it is “moral and economic madness” to fund new fossil fuel projects.

‘OPEC is doing its part’

Al Ghais’ comments come shortly after the influential producer group of OPEC and non-OPEC partners, an energy alliance often referred to as OPEC+, surprised market participants at its Aug. 3 meeting by announcing plans to sell just 100,000 barrels from next month. to add per day.

The group said “severely limited availability of overcapacity” meant that it was necessary to proceed with “great caution”.

It was seen as a snide at US President Joe Biden, who last month, during a visit to OPEC pivot Saudi Arabia, called on the group to pump more oil to help the US and the global economy.

On September 5, OPEC and non-OPEC producers will meet.

On September 5, OPEC and non-OPEC producers will meet.

Jakub Porzycki | NurPhoto | Getty Images

When asked whether OPEC, which produces about 40% of the world’s oil production, should be blamed for rising energy prices driving inflation, Al Ghais replied: “No, absolutely not. I mean, it’s all relative, that’s number one.”

“Number two is OPEC doing its part. We have increased production in line with what we see and a gradual mechanism that has been very transparent… We are doing everything we can to rebalance the market, but there is are economic factors that are really beyond OPEC’s control,” he added.

Oil prices have fallen in recent weeks amid renewed concerns about a global recession and declining demand prospects.

International benchmark Brent oil futures traded at $92 a barrel Wednesday morning, down about 0.4%, while US West Texas Intermediate futures were $86.25 a barrel, down more than 0.3%.

Brent futures soared to nearly $128 a barrel in the days following Russia’s invasion of Ukraine on Feb. 24 – as part of a rebound in prices for all types of energy that propelled inflation to decades-long highs.

OPEC’s relationship with Russia is ‘firm’

On the energy alliance’s ties to Russia, non-OPEC leader, Al Ghais said the group has a “solid” relationship with Moscow and is always trying to separate politics from its market-stabilizing goals.

“First of all, if you look at history, if I may, such challenges are not new to OPEC and OPEC history,” said Al Ghais, referring to the Iran-Iraq war in the 1980s and the invasion of Kuwait. in 1990.

“We always try to separate the politics and the political aspects in our meetings from what we do in terms of managing the market balance and in terms of what we do as OPEC+, I think the methodology is clear,” he continued.

“Russia’s leadership in supporting the declaration of cooperation has been clear from day one, since 2017. The relationship is solid in terms of market management.”

When asked if this means he trusts Russia, Al Ghais replied, “Yes.”

A well-known OPEC figure, Al Ghais’ career in the global oil industry spans 30 years.

He has advised six Kuwaiti oil ministers on oil market developments in recent years and was previously a lead member of the Kuwaiti delegation to OPEC meetings.

Al Ghais served as the governor of Kuwait for OPEC from 2017 to 2021 and was also a member of the group’s internal audit committee.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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