IEA cuts oil demand forecast

Cornelia Mascio
Novembre 14, 2017

The IEA, which tracks the energy for 29 countries, said the USA - once reliant on imports - is becoming the "undisputed global oil and gas leader".

The dramatic shifts envisioned by the IEA in its World Energy Outlook would transform the USA from an energy importer into a major player in global markets capable of producing 30 million barrels of oil and gas a day by 2025.

Under its "New Policies Scenario", based on existing legislation and announced policy intentions relative to emissions and climate change, the oil price should continue to rise towards $83 a barrel by the mid-2020s.

The International Energy Agency said in its market report for November that recent trends toward balance were supported by lower production from OPEC members like Iraq and Venezuela, which may be temporary. "This is a continuation of the strong demand growth we are seeing in our short term oil market analysis", the report said.

It believes that global energy demand will rise 30% by 2040, driven by higher consumption in India. "Meeting this demand would require an overall investment of around $10.5 trillion across upstream, midstream and downstream operations" Opec Secretary-General, Mohammad Barkindo, said noting that the 2017 outlook was more positive than previous year, partly thanks to oil exporting nations' efforts to stabilise the market.

Hurricane Harvey contributed to a sharp decline in industry stocks held in developed nations grouped together in the OECD, the IEA said, adding this contributed to worldwide oil stocks seeing a quarterly decline for only the second time in the past two years.

"Yet this is precisely what is happening as a result of the US shale revolution - both for oil and for natural gas", the IEA said.

US oil prices have risen above $55 a barrel recently amid geopolitical tensions overseas, supply disruptions and an anticipated extension of OPEC's production cuts next year.

"It's quite spectacular, because you're going to see the number of cars on the road double from one billion to 2 billion, thanks to electric vehicles and fuel economy standards", said Laura Cozzi, head of the Energy Demand Outlook division.

The expected USA surge will account for 80% of the increase in global supply over the time period.

A study by Bank of America Merrill Lynch forecasts that pure electric vehicles would achieve a global penetration of 12 per cent in 2025, 34 per cent by 2030 and 90 per cent by 2050.

The report suggested that over the next two decades, the global energy system would be reshaped by four major forces: the United States as it becomes global oil and gas leader, rapid deployment of renewables, growing share of electricity in the energy mix, and China's new economic strategy taking it on a cleaner growth mode.

"Solar is forging ahead in global power markets as it becomes the cheapest source of electricity generation in many places", said Fatih Birol, executive director of the IEA.

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