The IEA also said that the retreat by non-OPEC members will open up room in the oil market for increased production from Iraq and Iran, the latter of which is set to have its economic sanctions lifted due to the nuclear deal with Western powers earlier this year. U.S. shale oil production is forecast to drop for an eighth month in a row to 4.95 million bpd in December, 118,000 bpd less than in November, the US Energy Information Administration said this week.
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Oil is trending a little higher in the Asian period but still very much under pressure, said Ben le Brun, market analyst at OptionsXpress.
“Since prices at today’s levels push out higher-cost sources of supply, such a scenario depends heavily on the world’s lower-cost producers: reliance on Middle East oil exports eventually escalates to a level last seen in the 1970s”, says the report.
The Paris-based global Energy Agency (IEA) is forecasting oil prices to stay low for many years.
The oil market will likely remain oversupplied until the end of the decade, and in its World Energy Outlook, the IEA said it anticipates oil demand growth to be less than 1% per year until 2020.
The IEA (International Energy Agency) has echoed the Saudi sentiment in its annual assessment of the energy market saying that the collapse in oil prices risks undermining efforts to reduce the pollution blamed for global warming, a topic at the top of the COP climate change conference in Paris later this month.
The global Energy Agency’s World Energy Outlook 2015, released on Tuesday, says the single-largest energy demand growth story of recent decades is near its end.
Under a scenario in which the world holds rising temperatures to two degrees above preindustrial levels, crude demand would peak in 2020 at 93.7 million barrels and decline to 74 million barrels by 2040.
“The potential impact of current cuts in expenditure on future oil supplies is both substantial and long-lasting”, said Abdulaziz, adding that almost five million barrels daily of projects had already been deferred or cancelled.
While both countries will have high demand for nuclear and renewable energy, the report said, India could also become the largest source of new demand for oil and for the dirtiest of fossil fuels: Coal.
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IEA expects China’s crude oil consumption to double the United States demand in the next 25 years. “And we see an increase in the demand for OPEC crude”.
