Industry Faces Lack of Investment: Mercuria

Oil prices could rise above current levels of around $120/b in coming years as supply-side constraints more than offset the impact of a potential global recession according to Mercuria’s head of commodity trading Marco Dunand.

• "The bigger problem for me is the lack of big investments in the upstream industry in general. The uncertainty brings a reduced amount of investment. We are reaching a crazy moment where cash flows being generated by listed oil producers this year are close to $1 trillion but only a small percentage is being reinvested in upstream. The rest is being returned to shareholders," Dunand said at an event in London today.
• "The short-term price could be going higher if you have a crisis in some producing regions, but I am more worried about next year or the year after due to the lack of investments. That could mean we stay in a higher price environment for the foreseeable future,"
• "The refined product crisis is much bigger than just Russia. It is much more to do with the fact that we have been shutting down refining capacity over the years and now the world demand is rebounding," he said. "What you need is more refining capacity to turn crude into products."