RIYADH, Saudi Arabia—As the West looks to Saudi Arabia for higher oil production amid elevated prices, the kingdom’s officials used an international investment conference here to send a message: Do more to solve energy problems on your own.
Amid a diplomatic spat with the U.S. over oil-production levels, the kingdom took advantage of the opportunity of having the ear of thousands of global investors, government officials and business leaders to deliver the view from Riyadh.
Top Saudi officials warned that the world hasn’t invested enough in fossil-fuel production to stave off another energy crisis related to the war in Ukraine, leaving them vulnerable to shocks this winter. In some cases, Saudi officials said, Western governments were making things worse.
chief executive of Saudi Arabian Oil Co., the state-owned energy giant, criticized Wednesday the execution of the evolving global plans to decarbonize, saying they focused too much on investment in renewables and not enough on helping countries transition from coal to cleaner fuels.
“We’re looking at it from a Western point of view and the rest of the world needs to adapt. No, it doesn’t work like that,” Mr. Nasser said during a panel at the Future Investment Initiative, often called Davos in the Desert.
A day earlier, Saudi Energy Minister
Prince Abdulaziz bin Salman
took aim at Western governments that have released millions of barrels of crude oil from storage in a bid to ease prices that shot above $100 a barrel after Russia’s invasion of Ukraine and have stayed elevated.
Among the Western governments that have released crude from storage is the U.S. President Biden ordered a record 180 million barrels released earlier this year.
“Losing emergency stocks may be painful in the months to come,” Prince Adbulaziz said Tuesday, saying the governments were trying to manipulate prices.
The U.S. didn’t send any high-level officials to the conference. The White House has said the release from the Strategic Petroleum Reserve was part of Mr. Biden’s efforts to keep energy affordable for Americans.
The Saudis angered the Biden administration earlier this month by orchestrating a production cut of 2 million barrels a day by the Organization of the Petroleum Exporting Countries and its Russia-led allies. The cut helped to raise gasoline prices at a time of high inflation and just before the U.S. midterm elections. The Biden administration asked the Saudis to delay the cut, but the kingdom refused.
Oil prices rose after the cut was announced, with Brent crude increasing to nearly $97 a barrel. Prices have since fallen. Brent traded at $91.86 a barrel on Wednesday morning.
Saudi Arabia is the world’s largest oil exporter, and pumps less than its capacity, giving it the ability to affect prices by raising and lower production as needed.
Saudi officials have said high gasoline prices in the U.S. aren’t only driven by oil prices but also by a lack of refining capacity.
U.S. refineries have reduced their capacity by about 800,000 barrels a day since before the pandemic began. The Biden administration has tried to urge the U.S. oil industry to make more fuel, but with existing refineries running near capacity, there is little that can be done short term to ease the supply gap, analysts said. Gasoline prices remain sensitive to changes in oil prices though.
Globally, energy investment is expected to increase 8% in 2022, with most of the growth coming from renewables, according to the International Energy Agency, an institution funded by oil-consuming nations including the U.S. But oil and gas spending is largely down, the IEA found, with only Middle East national-oil companies expected to spend more on conventional fuels in 2022 than in 2019.
The IEA called oil and gas spending “too high for a pathway aligned with limiting global warming to 1.5 °C but not enough to satisfy rising demand.”
In the coming months, Western governments have visited Saudi Arabia and other oil-producing countries in hopes of securing guaranteed oil supplies, particularly in December, when a European embargo on Russian oil is set to go into effect at the same time as a price cap on Moscow’s crude by the Group of Seven wealthy nations.
Russia, one of the world’s three biggest oil producers, has said it wouldn’t sell oil to any country participating in the price cap, raising fears of a shortfall in oil.
Mr. Nasser called oil a “fungible commodity” that will find its way to markets. Russia is discounting its oil and finding buyers in Asia, while oil from elsewhere, including Saudi Arabia, is going to Europe and North America.
Prince Abdulaziz said he was in touch with European leaders about supplying oil in the event of a shortfall in December when there will also be another OPEC meeting. He said the price cap and EU embargo wouldn’t affect Saudi decisions.
“Business as usual,” he said when asked about his plans for December. “In the coming months, we will supply oil to all who need it from us.”
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