Saudi Arabia warns of impending oil crunch

Saudi Arabia’s oil minister, Ali al-Naimi, this week warned of a potential ‘catastrophic’ oil shortage in the near future.

Naimi warned that ‘high hopes’ in untested renewable energy sources have diverted investment from oil exploration.

“We frankly court disaster if these supplemental resources on which such high hopes for energy security and sustainability are pinned do not fulfil their high expectations,” he said.

“In years to come, if traditional energy supplies should prove inadequate because capital expenditure was curtailed due to unsustainable prices, unreliable indication of future demand or hopes for a substitute that oil cannot deliver, such a supply crunch would be catastrophic.”

Low oil prices, currently at $47 per barrel, are unsustainable, Naimi said, because they eliminate investment and tighten long term supply.

He confirmed, however, that Saudi Arabia will continue to invest in oil expansion despite the recent plummet in oil prices.

“Despite the current economic situation and other challenges to the energy sector, Saudi Arabia will stay the course with our long-term capital investments for oil and gas expansion,” Naimi said.