Oil prices influenced by 'transition premium', Opec secretary general says

Fossil fuels will remain the dominant energy source through 2045, says Mohammed Barkindo

The head of the 13-member group of oil-exporting nations spoke out against "misrepresentation" of the oil industry by oil activists, at the event. EPA

Crude oil prices are being affected by a "transition premium" amid the switch to renewables, in addition to the fundamentals of global supply and demand, Opec's secretary general has said.

"I am sure you must have noticed in the market today," Mohammed Barkindo told reporters at the Gastech industry event in Dubai.

"The prices that we are seeing are not entirely dictated by supply and demand conditions because a transition premium is [added to] the prices of hydrocarbons."

He declined to explain how much of an impact the transition premium had on global oil prices.

Oil prices rose during the second trading session on Tuesday.

Brent, the international benchmark, was up 1 per cent at $74.66 per barrel at 4.43pm UAE time. West Texas Intermediate, which tracks US crude grades, was up 1.01 per cent at $71 per barrel.

The head of the 13-member group of oil-exporting nations spoke out against "misrepresentation" of the oil industry by oil activists, at the event.

"Unfortunately, this global conversation has been thoroughly misrepresented. And the narrative is being distorted because emotions have taken over industry facts," Mr Barkindo told a panel session.

Mr Barkindo's comments follow a call by the International Energy Agency to halt all fossil fuel investments and limit sales of internal combustion engine passenger cars to achieve global net-zero targets by 2050.

The Paris-based agency's road map to carbon neutrality calls for no new investment in fossil fuel supply projects and no further final investment decisions in new unabated coal plants, which use the fuel without lowering its carbon impact.

Prince Abdulaziz bin Salman, the energy minister of Saudi Arabia, the world's largest exporter of oil, previously dismissed the IEA's call to end fossil fuel investments as "a sequel of [the] La La Land movie".

Mr Barkindo, a former politician in Nigeria, Africa's biggest oil producer, said demand for oil would continue to grow for the foreseeable future.

"Facts are very clear, that this world will continue to consume energy. In our forecast to 2045, we project that demand for energy will grow by a whopping 28 per cent," he said.

"Oil and gas will remain the dominant sources of energy in the global energy [landscape]," he added.

Opec remains largely bullish on oil demand. Its latest demand forecast shows consumption exceeding pre-pandemic levels in 2022.

The group expects global oil demand to reach 100.8 million barrels per day next year.

Opec also revised upwards, by 900,000 bpd to 4.2 million bpd, its estimated demand growth for 2022, amid expectations of higher levels of economic activity and fewer movement restrictions.