OPEC has warned that sharp cutbacks in investment by petroleum firms could pose a threat for future supplies.
Mohammed Barkindo who gave the warning said that after plunging by 26 percent last year, a further 22 percent drop in investment was expected this year.
Oil firms have slashed their investment budgets as they seek to adapt to the price of crude falling from over $100 per barrel in 2014 to under $30 at the beginning of this year, before recovering to around $45.
Early in the week, Brazil’s state oil company Petrobras announced it will cut investments by 25 percent over the next five years.
Barkindo called the cutbacks a “major concern for industries which need regular investments” and “which threaten our future”.
Too severe a cutback in investment could leave the industry unable to meet rising demand in future years.
The OPEC secretary general said “to revise this cut in investments, the process of rebalancing the market needs to be fast tracked”.
Oil prices haven’t rebounded as there has been too much crude on the market, with OPEC cartel states primarily responsible as they have kept output high, seeking to maintain market share.
Previously, OPEC members would cut back output to balance supply and demand, thus ensuring prices stay at levels sufficiently high for profits and investments.
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