A Global Oil Shortage is less than 18 months away - Aug 5
Posted: Thu Aug 05, 2021 2:41 pm
Goehring & Rozencwajg
Natural Resource Market Commentary
August 5, 2021
The IEA Ushers in the Coming Oil Crisis
The foundation for the upcoming oil crisis is now firmly set in place. The world is re-opening
and global oil demand is recovering strongly. By the beginning of 2022, global oil demand
should be making new highs. Non-OPEC oil supply has fallen by over 2 mm barrels per day
from its 2019 peak and non-OPEC oil supply growth will turn negative as we progress
through this decade. A structural gap will soon emerge between supply and demand. As
early as Q4 of 2022, demand will approach world oil-pumping capability — a first in 160
years of oil history. The ramifications will be huge and the investment implications monumental.
The International Energy Agency’s (IEA) bombshell release of its “Net Zero By 2050” report
on May 17th, 2021 added more fuel to the fire. In that report, the IEA aggressively recom
mended that the global oil and gas industry stop investing in their traditional upstream
businesses. Instead, the IEA recommended capital should be redirected to other uses —
primarily renewable energy projects.
The IEA was established by the industrialized nations to carefully monitor and ensure
the security of oil supplies after the 1973–1974 oil crisis. Preventing oil shocks caused by
unanticipated and severe oil supply disruptions, was its primary goal. In the May 17th paper,
Dr. Fatih Birol reiterated the IEA’s primary purpose: “Since the IEA’s founding in 1974,
one of its core missions has been to promote secure and affordable energy supply to foster
economic growth.” How ironic it is that an agency, originally trusted with the encourage
ment of oil supply security, is now aggressively adopting policies that will severely hinder
the security of those supplies. The IEA’s policies will produce outcomes exactly at odds with
their original charter.
The irony is stunning and the unintended consequences will be far reaching.
To read the full report on this topic send me an email and I will forward it to you. dmsteffens@comcast.net
Natural Resource Market Commentary
August 5, 2021
The IEA Ushers in the Coming Oil Crisis
The foundation for the upcoming oil crisis is now firmly set in place. The world is re-opening
and global oil demand is recovering strongly. By the beginning of 2022, global oil demand
should be making new highs. Non-OPEC oil supply has fallen by over 2 mm barrels per day
from its 2019 peak and non-OPEC oil supply growth will turn negative as we progress
through this decade. A structural gap will soon emerge between supply and demand. As
early as Q4 of 2022, demand will approach world oil-pumping capability — a first in 160
years of oil history. The ramifications will be huge and the investment implications monumental.
The International Energy Agency’s (IEA) bombshell release of its “Net Zero By 2050” report
on May 17th, 2021 added more fuel to the fire. In that report, the IEA aggressively recom
mended that the global oil and gas industry stop investing in their traditional upstream
businesses. Instead, the IEA recommended capital should be redirected to other uses —
primarily renewable energy projects.
The IEA was established by the industrialized nations to carefully monitor and ensure
the security of oil supplies after the 1973–1974 oil crisis. Preventing oil shocks caused by
unanticipated and severe oil supply disruptions, was its primary goal. In the May 17th paper,
Dr. Fatih Birol reiterated the IEA’s primary purpose: “Since the IEA’s founding in 1974,
one of its core missions has been to promote secure and affordable energy supply to foster
economic growth.” How ironic it is that an agency, originally trusted with the encourage
ment of oil supply security, is now aggressively adopting policies that will severely hinder
the security of those supplies. The IEA’s policies will produce outcomes exactly at odds with
their original charter.
The irony is stunning and the unintended consequences will be far reaching.
To read the full report on this topic send me an email and I will forward it to you. dmsteffens@comcast.net