Although OPEC is sometimes held up as the standard suspect when it comes to rising crude oil and gasoline prices, the organization is not to blame for the present inflationary trend, according to OPEC Secretary General Haitham Al Ghais.
In addition to his denial that OPEC is to blame for inflation, the new Secretary General told CNBC’s Hadley Gamble that the organization must be portrayed as having significant market power. Al Ghais asserted that the increase in crude oil prices extends beyond OPEC, and he blamed underinvestment—more specifically, “chronic underinvestment”—for the rise in the cost of crude oil and gasoline.
“There are other factors beyond OPEC that are really behind the spike we have seen in gas [and] in oil. And again, I think in a nutshell, for me, it is underinvestment — chronic underinvestment.”
Proposing his solution to high oil prices, he said: “This is the harsh reality that people have to wake up to and policymakers have to wake up to. Once that is realized I think then we can start to think of a solution here. And the solution is very clear. OPEC has a solution: invest, invest, invest.”
After the most recent OPEC meeting, OPEC issued a warning that there was a severely limited supply of excess capacity and that the group should therefore use what spare capacity it did have extremely cautiously. This warning aimed to strike a delicate balance between downplaying its influence on oil prices and demonstrating the strength of its influence over the market.
Even though it continues to fall millions of barrels per day short of its output quotas, OPEC+ increased its production target for September by just 100,000 bpd. On Wednesday, the price of oil partially recovered from earlier in the week, with Brent rising to $92.92 per barrel.