Speaking on the sidelines in Davos at the World Economic Forum, the chief executive of Occidental Petroleum has warned that oil exploration is failing to keep pace with demand.
Chief Vicki Hollub explained that this could lead to a shortage of oil from 2025. While the price of WTI Crude averaged around $78 last year, Hollub predicted that this could go up to between $80 and $85 from 2025, as the market moves from oversupply in the near term to a lack of sufficient oil production to meet global demand.
She pointed out that oil companies were discovering about five times more oil than was consumed at the time between the mid-1950s and 1970s, but this dropped to about a quarter last year. She said:
“In the near term, the markets are not balanced; supply and demand are not balanced. 2025 and beyond is when the world is going to be short of oil.”
The shale revolution in United States has made the country the world’s biggest oil producer, as companies like ExxonMobil and Chevron, the makers of the Mobil and Texaco grease and lubricant ranges, find new ways to get the most out of unconventional oil resources.
Hollub pointed out, however, that this had distracted US oil majors from exploring for conventional reserves, which typically have a much longer lifespan than shale reserves. She said that scenarios for the energy transition would need to factor in that a greater degree of oil exploration will be needed to meet the world’s demand for oil.
