Saudi Aramco's CEO warned a global economic rebound could kill off any spare oil capacity out there.
That could deepen the world's energy crisis, which has already sent prices in Europe soaring.
More investment by companies is needed to improve the supply situation.
Saudi Aramco chief executive Amin Nasser delivered grim reading on the future of the global energy crisis, noting that he was worried that improved macroeconomic conditions could kill off any spare oil capacity out there, causing more pain for an already supply-strapped global market.
"When the global economy recovers, we can expect demand to rebound further, eliminating the little spare oil production capacity out there ... that is why I am seriously concerned," Nasser said at an event on Tuesday, Reuters reported.
Nasser estimated that spare oil capacity currently only accounts for a mere 1.5% of global demand. That's a severe lag, largely due to chronic underinvestment in oil and gas production in the industry – an issue OPEC+ has also blamed for being behind soaring energy prices.
Energy prices in Europe have soared over 1,000% since the invasion of Ukraine, driven by Russia' throttling of energy flows to the rest of the continent.
Countries across Europe have tried to provide relief. The UK has implemented a power price cap, and the European Union has proposed a profit tax on energy companies, which help distribute some of the industry's massive profits over the course of this year back to households. Nasser criticized of the measure, though, stating that it wouldn't be a solution for long-term relief, .
"Taxing companies when you want them to increase production is clearly not helpful," he said.
He speculated investors were holding back due to the "fear factor" of today's macroeconomic climate, but more investment now was critical for the supply situation to improve, especially since energy industry experts say it takes around three to four years for new investment to have an impact on production
Saudi Aramco is investing heavily in oil production itself, aiming to increase production to 13 million barrels a day over the next five years.
"The conflict in Ukraine has certainly intensified the effects of the energy crisis, but it is not the root cause …Sadly, even if the conflict stopped today as we all wish, the crisis would not end," he said.
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