IEA says hopes of higher, stable oil prices could be dashed quickly

IEA says hopes of higher, stable oil prices could be dashed quickly

IEA says hopes of higher, stable oil prices could be dashed quickly

The boom will turn the USA, still among the biggest oil importers, into a net exporter of fossil fuels.

The report suggested that over the next two decades, the global energy system would be reshaped by four major forces: the United States as it becomes global oil and gas leader, rapid deployment of renewables, growing share of electricity in the energy mix, and China's new economic strategy taking it on a cleaner growth mode.

The dramatic shifts envisioned by the IEA in its World Energy Outlook would transform the USA from an energy importer into a major player in global markets capable of producing 30 million barrels of oil and gas a day by 2025.

"Solar is forging ahead in global power markets as it becomes the cheapest source of electricity generation in many places, including China and India", IEA executive director Dr Fatih Birol avers. "The recent price support, namely the tension in the Middle East, has been swept aside as rising rig counts and USA shale output (are) in the focus of traders", PVM Oil Associates analyst Tamas Varga said.

The agency raised estimates for the amount of shale oil that can be technically recovered by about 30 per cent to 105 billion barrels.

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On the other hand OPEC demand for their oil is up to 33.42 million barrels per day (bpd) of OPEC crude next year, an increase of 360,000 bpd from its previous forecast and the fourth consecutive monthly increase in the projection from its first estimate made in July.

The U.S. industry "has emerged from its trial-by-fire as a leaner and hungrier version of its former self, remarkably resilient and reacting to any sign of higher prices caused by OPEC's return to active market management", the IEA said.

Oil price should continue to rise towards $83 a barrel by the mid-2020s as global oil demand is poised to fall only modestly alongside the expected rise in electric vehicles over the next two decades, the International Energy Agency, or IEA, said on Tuesday. The world will use just over 100 million barrels of oil a day by 2025.

The report includes several caveats: While the USA will become a major exporter of light crude and refined products, it will remain a major importer of heavier crude oil that is used in many of its refineries. The country will "see a reduction of these huge import needs", Birol said at a press conference in London. But the expected increase would put the US further into uncharted territory. The country is expected to account for 80 per cent of the increase in global supply over the same period.

Meanwhile events in Saudi Arabia, OPEC's kingpin, "have added extra momentum to the rally that has driven oil prices from lows of $45/bbl (Brent) in late June to around $63/bbl recently", the IEA said.

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