Fatih Birol (Ankara, 1958) has been at the head of the International Energy Agency (AIE). Despite the recent fall in the price of oil, this economist expert in energy warns of the risk of future increases resulting from the scarce investment in the sector.
Question. Saudi Arabia has just said that it will cut production. How do you interpret it?
Answer. When it reached $ 86 last month, the barrel of brent approached the red zone, becoming a serious threat to global growth. Despite the latest price declines, demand remains robust. And we still see many vulnerabilities in key producers such as Venezuela, Iran, Libya, Nigeria or Angola. At the same time, the growth rate of the economy is reduced by the threat of commercial war and the risks in the emerging ones due to the depreciation of their currencies. My suggestion to the key producers is that they are careful with their production plans so that they act responsibly. Not only today, but in the next quarter.
P. Is the Saudi ad a probe or is it a real risk?
R. I do not know what effect it will have, but if they manage to boost prices, it will not be good news for Spain, India, China or other countries that import significant amounts of oil. Especially these days, when economic growth seems more fragile. It would have a very serious impact. For example, in India the depreciation of the rupee against the dollar has made consumers pay the same price for oil last month, when it was at 86 dollars, when it was at 147 dollars.
P. Why have prices gone up since October?
R. We see an excess of significant production coming closer and closer. And the sanctions on Iran have not been as strong as the market expected. The result is that prices fall now. But we have to think about tomorrow, about the vulnerabilities of the producing countries.
P. In its latest report, the IEA warns that lower investment can lead to production shortages and future price escalation.
R. It is a very serious threat because of the lack of appetite for investment in conventional oil, beyond the fracking To avoid a serious problem in the market in the mid-2020s, unconventional crude (shale) has to increase by 2025 by more than 10 million barrels per day, which would surpass Russia. In the history of oil there has not been a single case of a country that did something like that and I doubt that now someone does. If this unprecedented growth does not come from the US, we can enter turbulent waters. It's not good news. US shale oil can do a lot, but it can not do everything alone.
P. What are the scenarios?
R. If by 2020 the investment does not rise and the US fracking does not achieve the miracle of increasing both the supply, prices will rise significantly.
P. What price increases do you forecast in the medium term? A barrel at $ 80? To 100?
R. I can not give concrete figures. But the increase could be significant, which would be bad news for consumers. And, in the long term, it would also be bad for exporters.