Saudi Aramco says world faces major oil crunch

The head of Saudi Aramco said the world is facing a major oil supply crunch as most companies are afraid to invest in the sector due to green energy pressures.

Amin Nasser, head of the world's largest oil producer, said on Monday he was sticking to the goal of expanding capacity to 13 million barrels per day, from the current 12 million by 2027, despite calls to do it faster.

There is less than 2% of spare capacity in the world. The aviation industry consumed 2.5 million barrels per day more than today before COVID. Nasser told Reuters that if the aviation industry picks up speed, you're going to have a major problem," Nasser told the World Economic Forum in Davos.

What happened in Russia-Ukraine masked what would have happened. We were going through an energy crisis because of a lack of investment. He added that it started to bite after the pandemic.

Nasser said that China's COVID restrictions would not last long and global oil demand would resume its growth.

Saudi Arabia is currently producing 10.5 million barrels of per day, or every tenth barrel in the world, and will likely raise output to 11 million barrels per day later this year when the pact between OPEC and allies such as Russia ends.

Riyadh has faced calls from the West to raise output faster and expand capacity faster to help combat the energy crisis.

If we could expand capacity before 2027, we would have done it. This is what we tell policymakers. It takes time for Nasser to say that dialogue between the oil industry and policymakers about the transition from fossil fuels to energy that does not result in carbon emissions has been problematic.

I don't think there is a lot of constructive dialogue going on. We are not brought to the table in certain areas. He said that the last year's UN climate conference in Glasgow, Scotland was not invited to be part of the COP in Glasgow.

He said last year that the International Energy Agency message that world oil demand was set to fall and no new investment in fossil fuel was needed had a profound impact on the world's economy.

We need to have a more constructive dialogue. They say they don't need you by 2030, so why would you go and build a project that takes 6 -- 7 years. He said that the energy transition process was often proving chaotic and disruptive because your shareholder won't allow you to do it.

When you don't have plan B ready, don't demonise plan A, he said. The pressure and the rhetoric is - don't invest, you will have stranded assets. It makes it hard for CEOs to make investments. stranded asset theory is the idea that significant oil and gas reserves are left unused because they are longer needed.

Nasser said missteps would only encourage greater use of coal by many Asian countries during the global energy transition.

The priority for policymakers in those countries is to put food on the table for their people. Aramco, where Saudi Arabia is the main shareholder, was different as it was investing in both fossil fuel and energy transition, if coal can do it half the price they will do it with coal.

We are not adding enough energy to meet the energy security of the world.