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Why The IEA’s “Peak Oil” Forecast May Be Good for Energy Investors

energy stocks

This week, the International Energy Agency (IEA) issued a report predicting that “peak oil” the all time high point in oil demand, will come as soon as 2029. My first thought on reading the report was “Here we go again!”. Forgive my cynicism but, as somebody who has been involved in markets and trading for around forty years, I have heard this so many times and with so many predicted dates for when the peak will be achieved that have come and gone, that I am inevitably skeptical when I hear it again. What I have learned over time, though, is that each time this prediction resurfaces, oil actually moves higher.

That has certainly been the case this week…

Obviously, there are reasons other than the IEA report for that, but there is a logical treason why seemingly bearish predictions of peak oil, particularly when they come from usually reliable and well informed sources like the IEA, often have a bullish impact that can be sustained for some time. Such reports and predictions factor into the calculations of oil producers and transporters, as discussed in this piece about tanker operators, for example. That can cause a tightening of supply in anticipation of a drastic falloff in demand that, so far, has never really materialized.

One could argue that it must inevitably come at some point. I mean, aren’t EVs replacing cars with internal combustion engines? Aren’t wind turbines and great banks of solar panels visible everywhere you go? Isn’t oil under attack…

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