Risk of oil price hike after 2020
17 March, 2017
Global oil supply could struggle to keep pace with demand after 2020, risking a sharp increase in prices, unless new projects are approved soon, according to the latest five-year oil market forecast from the International Energy Agency. The global picture appears comfortable for the next three years but supply growth slows considerably after that, the IEA said. The demand and supply trends point to a tight global oil market, with spare production capacity in 2022 falling to a 14-year low.
In the next few years, oil supply will be growing in the United States, Canada, Brazil and elsewhere but this growth could stall by 2020 if the record two-year investment slump of 2015 and 2016 is not reversed. Oil demand will rise in the next five years and developing countries account for all of the growth. India’s oil demand growth will outpace China by then.
The largest contribution to new supplies will come from the US. Within OPEC, the bulk of new supplies will come from major low-cost Middle Eastern producers, namely Iraq, Iran, and the UAE. Others like Nigeria, Algeria and Venezuela will decline. Production from Russia is forecast to remain stable over the next five years.