IEA: Oil supply may struggle to meet demand after 2020

PARIS: Global oil output may struggle to meet demand after 2020 unless a recent recovery in prices spurs new investment, the International Energy Agency (IEA) said on Monday.

Oil supply “looks comfortable” for the next three years but on current trends, supply growth is likely to slow after that, the agency said in its annual fiveyear outlook.

Oil prices have stabilised at above US$50 (RM222.35) per barrel in recent weeks as oil producing countries implemented a deal to cut production by 1.76 million barrels per day (bpd) in order to prevent the recurrence of 2016’s price lows of around US$30 per barrel.

The IEA noted that investment in new oil and gas projects had dropped by 25% in 2015 and another 26% in 2016, but was showing “modest signs of recovery” in 2017, notably in the US.

Without new investment, there could be a price crunch after 2020, with spare production capacity falling to a 14-year low in 2022, the IEA warned.

“We are witnessing the start of a second wave of US supply growth, and its size will depend on where prices go,” said Dr Fatih Birol, IEA executive director.

“But this is no time for complacency,” Birol added, saying: “We don’t see a peak in oil demand any time soon. And unless investments globally rebound sharply, a new period of price volatility looms on the horizon.”

The IEA forecast that world demand would pass 100 million bpd in 2019 and reach about 104 million bpd in 2022. – dpa