Oil has slumped about 43 percent in the past year amid signs a global glut will persist as rising USA inventories keep the nation’s stockpiles more than 100 million barrels above the five-year seasonal average.
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IEA in a statement mentioned that OPEC’s objective to maintain its market share and pump as much oil it can, could result in Brent crude prices to hover around $50 a barrel until the end of decade.
According to the IEA, the plunge in oil prices has squeezed investment in supply while feeding demand, both factors that are beginning to push the market toward a rebalancing, and eventually, a return to higher oil prices.
Countries such as Mexico and Indonesia, long dependent on cheap home-produced oil and coal, are realising that a solar panel on every roof can reduce poverty by lowering energy costs as well as minimising the destabilising weather effects from higher Carbon dioxide emissions.
Energy industry investment in exploration and production fell 20 percent, or by about $130 billion from 2014 to 2015, he said.
Mr Birol said the Middle East, which provides about a third of the world’s oil, could see exp-orts equate to more than two thirds of total supply, particularly in a sustained environment of $50 oil prices.
“We are approaching the end of the single largest demand growth story in energy history”, Birol told the FT.
Consumption growth will slow from 2020 because of rising oil prices, efforts to phase out fuel subsidies, energy-efficiency policies and increased used of alternative fuels.
The IEA predicts that oil prices will not rise to $80 a barrel for at least four years.
Canada’s oil industry should not expect a quick rebound in crude prices to pre-collapse levels, despite growing demand and plunging global investment in new production, the worldwide Energy Agency warned Tuesday. It also projects India to become the chief diver for increased crude oil demand.
Non-OPEC producers would see their capacity reach 55 million barrels per day by 2020, reversing from its current level of 58.3 million bpd as high-cost producers retreat, the IEA estimates. The IEA believes that production cut from USA shale oil producers will not work, unless the OPEC group slashes its output. 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. Chevron (NYSE:CVX) said last month that it sees spending reductions through 2018, and Statoil (NYSE:STO) this month forecast oil holding to a $50-per-barrel price until 2018.
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Asia is the leading demand center for every major element of the world’s energy mix in 2040.
