The oil market could be heading for a supply crunch from 2025 onwards as oil exploration fails to keep pace with demand, Occidental Petroleum CEO Vicki Hollub said on Jan. 16.
Hollub, who spoke on the sidelines of the World Economic Forum in Davos, said U.S. WTI crude prices could trade in the $80 to $85 a barrel range from 2025. Prices averaged about $78 a barrel last year.
"In the near term, the markets are not balanced; supply, demand is not balanced," Hollub said, adding that, "2025 and beyond is when the world is going to be short of oil".
Hollub said that from the mid-1950s to the late 1970s, oil companies were finding around five times as much oil as was used, a ratio that has steadily declined to about 25% in 2023.
She said that from 2012, U.S. oil companies moved away from exploration and focused on tapping shale oil reserves, which have a much shorter lifespan than conventionally produced oil.
She added that she expected energy transition scenarios will have to be adjusted to accommodate for more oil exploration.
"I think the industry is looking at a scenario where we will be able to do all the things that we need to do as a part of the transition".
The market will move from near term oversupply, to a long period when the world is going to need more oil, she added.
Recommended Reading
Chesapeake Slashing Drilling Activity, Output Amid Low NatGas Prices
2024-02-20 - With natural gas markets still oversupplied and commodity prices low, gas producer Chesapeake Energy plans to start cutting rigs and frac crews in March.
73-year Wildcatter Herbert Hunt, 95, Passes Away
2024-04-12 - Industry leader Herbert Hunt was instrumental in dual-lateral development, opening the North Sea to oil and gas development and discovering Libya’s Sarir Field.
JMR Services, A-Plus P&A to Merge Companies
2024-03-05 - The combined organization will operate under JMR Services and aims to become the largest pure-play plug and abandonment company in the nation.
New Fortress Energy Sells Two Power Plants to Puerto Rico
2024-03-18 - New Fortress Energy sold two power plants to the Puerto Rico Electric Power Authority to provide cleaner and lower cost energy to the island.
SilverBow Rejects Kimmeridge’s Latest Offer, ‘Sets the Record Straight’
2024-03-28 - In a letter to SilverBow shareholders, the E&P said Kimmeridge’s offer “substantially undervalues SilverBow” and that Kimmeridge’s own South Texas gas asset values are “overstated.”