• 3 minutes Could Venezuela become a net oil importer?
  • 7 minutes Reuters: OPEC Ministers Agree In Principle On 1 Million Barrels Per Day Nominal Output Increase
  • 12 minutes Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 47 mins Could Venezuela become a net oil importer?
  • 5 hours Reuters: OPEC Ministers Agree In Principle On 1 Million Barrels Per Day Nominal Output Increase
  • 2 hours Tesla Closing a Dozen Solar Facilities in Nine States
  • 8 hours Saudi Arabia plans to physically cut off Qatar by moat, nuclear waste and military base
  • 2 hours Why is permian oil "locked in" when refineries abound?
  • 4 mins Could oil demand collapse rapidly? Yup, sure could.
  • 7 hours EU Leaders Set To Prolong Russia Sanctions Again
  • 33 mins Oil prices going down
  • 9 mins Gazprom Exports to EU Hit Record
  • 20 hours Teapots Cut U.S. Oil Shipments
  • 16 hours Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 10 hours Saudi Arabia turns to solar
  • 2 hours EVs Could Help Coal Demand
  • 20 hours Hot line, Macron: Phone Calls With Trump Are Like Sausages Best Not To Know What Is Inside
  • 8 hours China’s Plastic Waste Ban Will Leave 111 Million Tons of Trash With Nowhere To Go
  • 1 day Russia's Energy Minister says Oil Prices Balanced at $75, so Wants to Increase OPEC + Russia Oil by 1.5 mbpd
Alt Text

Rig Count Falters Amid Oil Price Correction

The rig count slipped on…

Alt Text

China Plans To Create A $78 Billion Natural Gas Giant

Chinese regulators are looking to…

Alt Text

Can Oil Pull Greece Out Of Poverty?

Greece’s withering economy could use…

Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

Trending Discussions

Oil Prices Likely To Rise Without More Middle East Investment

Oil Prices Likely To Rise Without More Middle East Investment

If the Middle East fails to invest adequately in its oil fields, global oil prices could spike by an additional $15 per barrel in the 2020s. That comes from the International Energy Agency in a new report assessing global energy investment needs through 2035.

The report estimates the investment in energy required to meet global demand over the next several decades. For example, $1.6 trillion was spent on energy supplies across the globe in 2013. That figure is expected to climb to $2 trillion annually over the next 20 years, with more than half of the annual sum going to offset declining production. In other words, the world will be forced to cough up over $1 trillion each year just to keep energy production flat.

While those figures are hard to fathom, they point to a future in which fossil fuels – oil in particular – become more expensive as cheaper reserves decline and producers go after harder-to-reach resources.

The U.S. has become infatuated with shale oil and gas, and has been lulled into a false sense of confidence because of rising oil production in North Dakota and Texas. The oil industry has been busy convincing the American public that we are destined for energy “superpower” status.

It is true that U.S. oil production has risen to its highest levels in over 20 years, but it may be short-lived. The IEA predicts that tight oil production in non-OPEC countries “starts to run out of steam in the 2020s.” After U.S. shale oil begins to fizzle out, the world “becomes steadily more reliant on investment in the Middle East” to meet demand growth.

But the problem is that the Middle East may not be up to the task. The IEA projects that the Middle East will need to lift its production from around 28 million barrels per day (bpd) currently to 34 million bpd by 2035. This will require billions of dollars in new investment.

But the national governments in question – which largely control oil within their territories instead of private companies – cannot necessarily be counted upon, according to the IEA. “There are competing government priorities for spending, as well as political, security and logistical hurdles that could constrain production,” the report says, in what could be the understatement of the year.

Related Article: The Questionable Staying Power Of The U.S. Shale Boom

The Middle East will “need to invest today if not yesterday,” the IEA’s chief economist, Fatih Birol said, because oil projects have lead times of about seven years. So in order to make up for declining tight oil production in places like the U.S., as well as meet rising demand, the Middle East needs to be preparing today for its 2020 production.

More to the point, the IEA predicted in a 2013 report that nearly half of total oil production growth between now and 2035 would come from just two countries – Iraq and Brazil. Iraq has succeeded in boosting its production to 3.6 million bpd, the highest level in 30 years, but its ability to nearly triple its oil production over that timeframe – which the IEA is counting on – is suspect, to say the least.

That means that oil prices could spike much higher by the 2020’s. The IEA estimates it could be $15 per barrel more as a result, but that could be wildly optimistic. Just to take one example, the IEA predicted in its 2002 World Energy Outlook that oil prices would remain flat for a decade or so, hitting $21 per barrel in 2010, after which prices would “rise steadily to $29 in 2030.”

Accurate forecasting is difficult, but that’s the point: Unanticipated geopolitical events can disrupt or entirely shatter our assumptions about what the future will look like.

All this is to say that we can’t count on adequate supplies (at a price we are willing to pay) to meet demand indefinitely. U.S. tight oil won’t solve all of our problems, despite what the industry says, nor will the traditional producers of the Middle East.

By Nick Cunningham of Oilprice.com




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News