TODAY.AZ / Business

IEA forecasts sharp increase in crude prices

07 March 2017 [14:27] - TODAY.AZ

By  Trend


Global oil supply could struggle to keep pace with demand after 2020, risking a sharp increase in prices, according to the Oil 2017 report of the International Energy Agency (IEA).

The demand and supply trends point to a tight global oil market, with spare production capacity in 2022 falling to a 14-year low, according to the report.

“In the next few years, oil supply is growing in the United States, Canada, Brazil and elsewhere but this growth could stall by 2020 if the record two-year investment slump of 2015 and 2016 is not reversed,” said the IEA analysts.

Oil demand will rise in the next five years, passing the symbolic 100 mb/d threshold in 2019 and reaching about 104 mb/d by 2022.

“Developing countries account for all of the growth and Asia dominates, with about seven out of every 10 extra barrels consumed globally. India’s oil demand growth will outpace China by then,” said the report.

While electric vehicles are an important factor for oil demand, the IEA estimates they will displace only limited amounts of transportation fuel by 2022.

"We are witnessing the start of a second wave of US supply growth, and its size will depend on where prices go,” said Fatih Birol, the IEA’s Executive Director. “Unless investments globally rebound sharply, a new period of price volatility looms on the horizon.”

The IEA expects US light tight oil (LTO) production to make a strong comeback and grow by 1.4 mb/d by 2022 if prices remain around $60 per barrel.

“The United States responds more rapidly to price signals than other producers. If prices climb to $80/bbl, US LTO production could grow by 3 mb/d in five years. Alternatively, if prices are at $50/bbl, it could decline from the early 2020s,” said the report.

Within OPEC, the bulk of new supplies will come from major low-cost Middle Eastern producers, namely Iraq, Iran, and the United Arab Emirates, while others like Nigeria, Algeria and Venezuela will decline, according to the forecasts.

For its part, production from Russia is forecast to remain stable over the next five years.

Additional crude oil exports from Brazil and Canada will be higher than those from the Middle East, IEA analysts believe.

URL: http://www.today.az/news/business/159247.html

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