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Global oil markets are at a “critical turning point” as low investment, economic uncertainty, and rising crude supplies deepen what industry leaders describe as the “triple energy challenge,” according to a top Arab energy official.

In an interview with Independent Arabia, Jamal Al-Loughani, secretary-general of the Arab Energy Organization, formerly OAPEC, said that geopolitical and trade tensions, coupled with shifting economic policies, are weighing on global oil demand, even as production climbs.

“Global oil markets are currently witnessing a critical turning point, especially in light of the uncertainty surrounding the global economy,” Al-Loughani said.

He pointed to a range of macroeconomic and geopolitical risks, including signs of slowing growth in China, volatility in US trade policy, weak economic growth in Europe, and tensions in key production regions.

He said that escalating conflicts in the Middle East drove futures prices above $80 a barrel in mid-June — their highest since early 2022 — before easing after a ceasefire agreement.

“This comes in addition to the ongoing Russian-Ukrainian crisis, the associated targeting of energy infrastructure, and the tightening of Western sanctions imposed on Moscow,” Al-Loughani added.

Rising demand, tight supplies

Global oil demand is forecast to grow by 680,000 barrels per day in 2025 and 700,000 barrels per day in 2026, reaching 104.4 million barrels a day, according to the International Energy Agency.

Non-member nations of the Organization for Economic Co-operation and Development — led by India, other Asian economies, the Middle East, and Africa — are expected to drive most of the gains, while demand in OECD countries is projected to decline by about 8.5 million barrels a day over the same period.

Current estimates put global crude demand growth at roughly 1.2 million barrels a day in the third quarter of 2025, bringing total demand to around 105.5 million barrels a day, Al-Loughani said.

He expects supplies to expand as OPEC+ gradually raises output, though production from non-OPEC+ countries is projected to drop to about 53.8 million barrels per day. Despite slight increases, oil inventories remain below the five-year average, underscoring what he called “strong market fundamentals.”

The secretary-general also said that these factors drove the average price of the OPEC crude basket to about $71 per barrel in July, its highest level in four months, while Brent and West Texas Intermediate futures are now trading steadily between $65 and $70 per barrel.

Investment gap

Al-Loughani warned that a lack of investment poses the most significant risk to the market.

“The lack of global investment in oil projects is the most pressing challenge, affecting not only member states but the world at large, as it exacerbates the ‘triple energy challenge’ of balancing energy security, sustainability, and affordability,” he said.

Oil exploration and production investments this year are expected to total about $480.6 billion, leaving a gap of more than 16 percent compared with the $596.5 billion needed annually to meet growing demand through 2050.

He added that global oil demand is projected to reach about 105.1 million barrels per day in 2025, though it remains subject to uncertainty stemming from China’s economic slowdown and disruptions in US trade policy.

OPEC+ strategy

The secretary-general highlighted the role of OPEC+, which includes six AEO member states, in maintaining stability since the alliance was formed in 2016.

He said the group’s 2025 strategy emphasizes production discipline while adopting a “flexible, interactive” approach to changing market dynamics.

The latest move — a decision by ������Ƶ, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman — will see the alliance raise production by 547,000 barrels per day in September, with the option to adjust output in response to shifting conditions.

Al-Loughani underscored that deeper cooperation among Arab oil producers and international partners remains vital.

“He noted that this cooperation proved effective during the COVID-19 pandemic, playing a key role in quickly restoring market balance and preventing prolonged collapses in oil prices,” according to Independent Arabia.

US energy policy shift

Al-Loughani also addressed recent shifts in US energy policy under President Donald Trump’s second term, describing measures aimed at boosting domestic production.

He said the changes included declaring a national energy emergency to speed up the implementation of oil and gas infrastructure projects through the executive order “America’s Energy Launch,” aimed at boosting local energy resources at affordable and reliable prices by removing regulatory barriers, easing environmental restrictions, and rolling back support for renewable energy.

He added that July’s passage of the “One Big Beautiful Bill” reduced federal royalty rates, simplified drilling permits, extended their validity to four years, opened more federal lands for drilling, and eliminated methane fees imposed by the Inflation Reduction Act.

The law also approved wellbore commingling — producing crude from multiple reservoirs through a single well — enabling more efficient and cost-effective output.

“However, Al-Loughani stated that these policy changes have not yet significantly impacted shale oil production, although they could enable approximately 225 new leases and 160 additional wells in 2026,” Independent Arabia reported.

RIYADH: ������Ƶ’s benchmark Tadawul All Share Index closed lower on Wednesday, slipping 48.34 points, or 0.45 percent, to 10,619.10.

Total trading turnover for the day stood at SR3.33 billion ($886.3 million), with 136 stocks advancing and 110 declining.

The parallel market Nomu gained 0.12 percent, or 30.65 points, to close at 25,673.03, while the MSCI Tadawul Index fell 7.87 points to 1,375.55.

The session’s top performer was Thimar Development Holding Co., which rose 9.99 percent to SR42.92. Red Sea International Co. gained 4.94 percent to SR44.60, and Umm Al Qura for Development and Construction Co. climbed 2.80 percent to SR23.15.

On the downside, Marketing Home Group for Trading Co. fell 3.84 percent to SR77.7, while Riyad REIT Fund dropped 3.51 percent to SR5.23.

In corporate announcements, Al-Rajhi Co. for Cooperative Insurance, known as Al Rajhi Takaful, announced the completion of its share repurchase program under its Employee Stock Incentive Plan.

The buyback, approved by shareholders on June 3 and disclosed the following day, involved the purchase of 300,000 shares with a total value of SR35.7 million, at an average price of SR119 per share.

Shares of Al Rajhi Takaful slipped 1.37 percent to SR115.40.

ADES Holding Co. said it signed a multi-year contract extension with QatarEnergy for its jackup rig Aquamarine Driller, in a deal valued at about SR808 million.

The contract, signed on Sept. 2, includes a firm four-year term with options for three additional one-year extensions. The financial impact is effective immediately.

Shares of ADES fell 0.20 percent to SR15.02.

Arab National Bank announced the completion of a $750 million US dollar-denominated additional Tier 1 capital sustainable sukuk under its international program.

The issuance, offered to eligible investors in ������Ƶ and abroad, will settle on Sept. 9. The offering comprises 3,750 sukuk, each with a par value of $200,000, paying a 6.4 percent annual fixed return. The perpetual sukuk are callable after five years.

Arab National Bank’s shares declined 2.75 percent to SR22.30.