The global oil industry should ramp up investment to ensure it can cope with future consumption growth and avoid supply shortages, OPEC Secretary-General Mohammad Barkindo told a conference in Baku.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia last year began withholding 1.8 million barrels per day (bpd) of supplies to tighten the market and prop up prices that in 2016 fell to their lowest in more than a decade at less than $30 a barrel.

Both Russia and the OPEC leader Saudi Arabia have spoken about the need for a gradual increase in oil production as the goal of removing excessive oil stockpiles has now been achieved and the market has broadly been balanced.

“The next critical phase before of us in the whole process is to sustain this accomplishment of market rebalancing and gradual recovery in investments and the return of confidence in our industry. One of the greatest and most prescient challenges before us is ensuring that there will be adequate levels of investment in a predictable fashion.” Barkindo said.

Barkindo said the pace of investment has picked up this year but there were not enough robust investments in long-cycle projects that are “the base load of future supply and the foundation of this industry’s future”.
He added that the required oil sector investment in the period to 2040 is estimated at about $10.5 trillion to meet future oil demand expected to surpass 111 million bpd.

“Every effort should be made to avoid a potential supply gap,” he added.

Nigerian Crude Struggles

meanwhile factors affecting Nigerian crude in the international market has been given as Angolan cargoes were gradually clearing, helping nudge crude differentials higher, while unfavourable arbitrages and an influx of U.S. grades into refineries in northwest Europe and the Mediterranean continued to undermine the Nigerian market.

* State firm Sonangol was said to be offering Dalia at a discount of $1.30 to dated Brent. Only a couple of cargoes remain from the June programme and about half the July programme has now sold, although Asian buyers have been more reticent in the last few weeks, traders said.

* Unipec offered July-loading Angolan cargoes in the window, including Plutonio at dated Brent minus $1.20 a barrel on a free-on-board basis, and Girassol at dated Brent minus 20 cents a barrel fob, a touch stronger than the previous day, but without unearthing any buyers.

* Unfavourable arbitrages both east and west have hurt demand for West African light sweet crudes, particularly from traditional buyers such as Indian refineries that have started to snap up shale instead.

* Traders said a handful of cargoes remained from Nigeria’s June loading programme. With stiff competition for buyers in Europe and Asia from both Mediterranean and U.S. grades, Nigerian crudes have felt the pinch badly in the past few weeks.

* Force majeure on exports of Bonny Light crude remains in place, according to a spokesman for Shell on Wednesday, while repairs are ongoing on the Trans Ramos pipeline, which feeds crude to the Forcados terminal.

* Iran’s crude oil exports have declined slightly in May, according to estimates from a leading tanker-tracking company, in the first sign that the threat of U.S. sanctions may be deterring buyers.

* India’s Reliance Industries, which owns the world’s biggest refining complex, imported 1.26 million bpd in April, down 3.8 percent from March and down 10.7 percent from a year ago, according to data from shipping and industry sources.