The International Energy Agency, an independent organization that focuses on energy issues for its 29 member countries, released a report today looking at the future of the oil market. The Medium-Term Oil Market Report
notes that while oil prices should start to rise gradually once the market
begins rebalancing, the availability of resources that can be easily and
quickly tapped will limit the scope of rallies – at least in the near term.
However, the report points to the risk of an oil price spike in the later
part of the outlook period arising from insufficient investment.
Global oil exploration and production capital expenditures (capex) are
expected to fall 17% in 2016, following a 24% cut in 2015 – which would be
the first time since 1986 that upstream investment has fallen for two
consecutive years, the report continues.
The report estimates 4.1 million barrels a day (mb/d) being added to global
oil supply between 2015 and 2021, down sharply from the total growth of 11
mb/d in the period 2009-2015.