El-Badri: rise of oil prices to reduce investment in industry

This is equivalent to around 900,000 barrels per day (bpd), and it is expected to reach demand of 103.5 bpd by 2040.

The drop in crude to around US$50 a barrel this year has triggered steep cutbacks in production of U.S. shale oil, one of the major contributors to the oversupply that has stripped 50% off the price in the last 12 months.

The IEA doesn’t see oil prices recovering above $80 per barrel until after 2020. “But, perhaps even more importantly, this decline will continue next year as well”.

The IEA said production growth from countries outside OPEC will slow over the next five years to less than a third of the rate recorded from 2010 to 2015.

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.

The IEA projects that India, not China, will be the biggest driver of global oil demand growth in coming years.

“Where it replaces more carbon-intensive fuels or backs up the integration of renewables, natural gas is a good fit for a gradually decarbonising energy system”, the IEA said.

Shares of the United States Oil Fund LP (ETF) (USO) are down 52.4 percent in the past year. A few of the countries with the largest potential to increase production over the long term — Iran, Iraq and Venezuela — also face “serious challenges” in attracting sufficient investment amid political instability and security concerns, the IEA said.

Oil prices increased on Tuesday following a forecast made by OPEC of a balanced market in 2016. The IEA said the $80 scenario was more likely.

Brent North Sea crude for delivery in December, the global oil benchmark, climbed to $47.44 a barrel in London, a gain of 25 cents from Monday s settlement.

In an August interview, she told CBC News many companies were already breaking even or losing money on their operations, as they still need to cover other costs, such as royalties and debt payments.

He said current sharp oil price fluctuations are very harmful to oil producers, consumers and workers alike.

Growth in non-Opec oil supply could stop by 2020 if spending cuts continue to impact the industry, warned the worldwide Energy Agency, the Paris-based energy advisor to industrialised nations.