Oil oversupply is lowering prices, but Occidental CEO predicts that will change.

The CEO of Warren Buffett's favorite energy company blamed oil market oversupply for keeping prices down. The International Energy Agency predicts a slowdown in oil demand in 2024. The global oil supply is forecast to reach a record 103.5 million barrels a day this year

Hollub cautioned that undersupply will dominate the future years, reversing the supply-demand imbalance that has pushed prices down in recent months.

Due to producers' inability to replace oil, energy markets are facing long-term supply challenges, Hollub added, even though crude consumption has dropped. She calculated the globe had replaced less than half of its oil production in the past decade.

All large fields are discovered. The 20 biggest fields in the world have 97% of their volume identified before 2000. In a couple years, we'll be low on supplies, thus the scenario will change "Holub said.

Other oil market experts predict a similar conclusion, where crude undersupply raises prices. Underinvestment in the sector has put oil and other commodities in a "supercycle," which Goldman Sachs said could drive petroleum to $100 a barrel.

OPEC+ has been cutting supplies to raise prices, and Saudi Arabia's energy minister called declining oil prices a "ploy" by market speculators who pretend demand is lower than supply. The oil cartel has cut output regularly to manage global petroleum prices and will cut 2.2 million barrels a day this quarter. Top members have suggested extending cutbacks into the year.

"What OPEC has tried to do is balance the markets," said Hollub. "They try to balance the markets in the near terms so we don't have all this volatility."

So far, OPEC measures have had little impact. Due to rising production abroad, notably in the US, which produced a record volume of oil in 2023 and is expected to set further records in 2024 and 2025, according to the Energy Information Agency.