The world faces a “staggering” surplus of oil equating to millions of barrels a day by the end of the decade, as oil companies increase production, undermining the ability of Opec+ to manage crude prices, the International Energy Agency has warned.
While demand is forecast to peak before 2030, continued investment by oil producers, led by the US, would by then result in more than 8mn b/d of spare capacity, the IEA wrote in its annual report on the industry released on Wednesday.
This “massive cushion” of extra oil could “upend” the efforts of Opec+ to manage the market and usher in an era of lower prices, the IEA said, adding that the level of spare capacity would be unprecedented outside the coronavirus pandemic.
“Oil companies may want to make sure their business strategies and plans are prepared for the changes taking place,” said Fatih Birol, the agency’s director.
The Paris-based body, founded in the aftermath of the 1970s Arab oil embargoes to advise on energy security, said last year that the world was at “the beginning of the end” of the fossil fuel era. It has said that demand for oil, natural gas and coal would all start to fall before the end of the decade amid the mass rollout of renewable energy and electric vehicles.
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