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The global oil market could be heading for a supply crunch starting in 2025 if exploration activities continue to fail to keep up with demand, Occidental Petroleum (NYSE:OXY) CEO Vicki Hollub said Tuesday at the World Economic Forum in Davos, Switzerland.
“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 CEO explained that between the mid-1950s and late 1970s, oil companies were discovering 5x as much oil as was used, but that ratio that has declined steadily to ~25% in 2023.
According to Hollub, U.S. oil companies in particular have shifted away from exploration since 2012 and focused on tapping shale oil reserves, which have a much shorter lifespan than conventionally produced oil.
The market will move from near-term oversupply to a long period when the world will need more oil, Hollub warned.
