There was a palpable unease in the air as the CEO of Occidental Petroleum, Vicki Hollub, issued a sobering prediction at the World Economic Forum in Davos, Switzerland. Hollub stated that the global oil market may well be hurtling towards a supply crunch, and as early as 2025, if exploration activities continue to lag behind burgeoning demand.
“In the near term, the markets are not balanced; supply, demand is not balanced,” and “2025 and beyond is when the world is going to be short of oil,” Hollub said, according to Reuters.
The oil industry has indeed undergone a remarkable transformation in recent decades. Hollub underscored this by harking back to the mid-20th century when oil companies discovered five times more oil than was actually used. However, she lamented that this robust ratio has dwindled steadily to a meager 25% in 2023.
Further elaborating on the dilemma, Hollub emphasized that U.S. oil companies, since 2012, have steered away from exploration endeavors, opting instead to exploit shale oil reserves. She noted that while lucrative, these reserves have a considerably shorter lifespan than conventionally produced oil.
Hollub’s prognosis was grim as she warned, “The market will move from near-term oversupply to a long period when the world will need more oil.” The palpable apprehension was evident in the room as the reality of the situation sunk in.