Petronas CEO: US$50 oil price is 'sweet spot' to sustain global energy investment
KUALA LUMPUR: The global oil industry needs prices to remain around US$50 per barrel to ensure sustained energy investment and avoid future supply shocks, said Petroliam Nasional Bhd (Petronas).
President and group chief executive officer Tengku Tan Sri Muhammad Taufik, said US$50 remains the industry's key break-even level, a "sweet spot" that enables continued investment while balancing affordability and supply security.
"When we faced the first challenge not too long ago, there was a call to be fit at US$50," he said in an interview with CNBC's Squawk Box Asia aired today.
"Given where prices plumbed the depths of the lower US$60s before this conflict, I think that rallying call may still be relevant.
"A break-even barrel of around US$50 keeps the industry afloat. There's that sweet spot, a fair way that keeps energy investments coming," he added.
Tengku Muhammad Taufik noted that underinvestment in energy infrastructure, if allowed to recur, could have wide-ranging consequences for global economic stability.
He pointed to the aftermath of the Covid-19 pandemic and the early phase of the energy transition as cautionary examples, where lagging investments led to price swings and exposed vulnerabilities in global supply systems.
"We cannot face another period of serious under-investment. That is going to cause us to go through another roller coaster, detrimental to world growth, detrimental to economic prosperity, and I think, threatens any pursuit of sustainability."
Tengku Muhammad Taufik said the 2022 energy crisis following Russia's invasion of Ukraine served as a wake-up call about the consequences of supply imbalances and reiterated the need for long-term planning.
"The push for a more deliberate move to a decarbonised system was really enhanced at that point in time. But we had to face harsh realities," he said.
"If we are unprepared for crisis and don't have proper supply, we risk underestimating the possibility of creating another full-blown energy crisis."
While acknowledging that the global energy transition is necessary, the Petronas chief said pragmatism is essential, especially in Asia where fossil fuels still dominate the energy mix.
"Seventy to 80 per cent of Asia's energy mix still relies on fossil fuels. We can't depart from that immediately," he said. "But can we make that mix lower-emission? Absolutely."
Tengku Muhammad Taufik's comments come as Malaysia and other Asean nations grapple with surging energy demand, driven by rapid industrialisation, population growth and the rise of technologies such as artificial intelligence.
He noted that Malaysia's electricity demand alone is growing at more than six per cent annually, a trend that underscores the urgent need for reliable and scalable energy solutions.
To meet these demands, he emphasised the need to sustain investment in traditional hydrocarbon assets, while simultaneously accelerating capital deployment into lower-emission technologies and cleaner energy solutions.
Strategic partnerships, he said, will be critical to advancing this dual-track strategy.
"We've got to deliver energy and we've got to deliver it cleanly. Affordability and access are still major issues in our region," he said.
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