Global oil demand is growing healthily as economies recover from the pandemic and spare production capacity is declining, the CEO of Saudi Arabia's state oil company Aramco said on Sunday.
Oil prices have surged to 14-year highs above $100 per barrel in recent weeks as Russia's invasion of Ukraine prompted fears of supply disruptions, leading Western countries to urge producers such as Saudi Arabia to increase output.
"Global spare capacity is around 2 million barrels per day, which is not significant enough to deal with these geopolitical events and what is happening in the market," Aramco CEO Amin Nasser said in a media call after the company reported bumper 2021 results.
Nasser said that he expected demand to return to pre-pandemic levels by the end of this year.
Asked whether Saudi Arabia would pump more oil to fill any gaps in the market left by the Ukraine conflict, Nasser said it would produce according to guidelines from the Saudi energy ministry.
"We will pump as long as we meet guidelines from the ministry with regards to levels of production," he said.
Saudi Arabia, and to a lesser extent its Gulf neighbour the United Arab Emirates, hold the bulk of spare capacity in the OPEC group of producer countries.
The Organisation of the Petroleum Exporting Countries and allies including Russia, together known as OPEC+, have been lifting output by 400,000 barrels per day each month since August, as they unwind cuts made when the pandemic hit demand.
The alliance has so far resisted calls for additional supplies.
Nasser said the geopolitical situation, a lack of investment in the hydrocarbons sector and a "totally unrealistic energy transition plan," we're making for a tight market.
"The market is very tight in terms of available barrels," he said. "We are doing our part but that is not enough, other players also need to do their investments."
Asked about a recent Wall Street Journal report that Saudi Arabia was in talks to price some of its crude sales to China in yuan, Nasser said the company did not comment on rumours or market speculation.
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