Global oil E&P capex spending is expected to fall 17% this year, following a cut of 24% in 2015. With production growth slowing significantly from the massive gains from 2009-2015, the lower levels in investment could eventually lead to oil price shocks in the future.
“In today’s oil market there is hardly any spare production capacity other than in Saudi Arabia and Iran and significant investment is required just to maintain existing production before we move on to provide the new capacity needed to meet rising oil demand,” the IEA said in its report. “The risk of a sharp oil price rise towards the later part of our forecast arising from insufficient investment is aS potentially destabilizing as the sharp oil price fall has proved to be.”
The IEA cautioned in its outlook that lower levels of investment could lead to price spikes in the future if demand begins to outpace supply. < IEA is now forecasting an increase in demand of 1.95 million barrels per day from Q1 to Q3 of THIS YEAR.
“It is easy for consumers to be lulled into complacency by ample stocks and low prices today, but they should heed the writing on the wall: the historic investment cuts we are seeing raise the odds of unpleasant oil-security surprises in the not-too-distant-future,” said IEA Executive Director Fatih Birol.
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Seeds of the next "Oil Crisis" have sprouted
Seeds of the next "Oil Crisis" have sprouted
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group