• 4 minutes 2nd Annual Great Oil Price Prediction Challenge of 2019
  • 7 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 10 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 13 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 7 hours The 5 Scary New Rules Of Upside-Down Capitalism
  • 2 hours Hydrogen Hurdles in Japan
  • 3 hours Winter Storms Hitting Continental US
  • 16 hours More dumbed down? re Hong Kong Act of Congress
  • 8 hours U.S. Shale To Break Records Despite Bearish Rhetoric
  • 8 hours PennEast Appealing Wacky 3rd Circuit Decision to Supreme Court
  • 11 hours Impeachment S**te
  • 6 hours Aramco IPO magic trick
  • 9 hours Contaminated Oil
  • 21 hours U.S. Shale Output may Start Dropping Next Year
  • 9 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 18 hours Petroleum Industry Domain Names
  • 23 hours Crazy Stories From Round The World
  • 9 hours Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 8 hours Pope Proposes New Sin: Thou Shalt Not Destroy The Harmony Of The Environment
Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

More Info

IEA Warns Of Supply Crunch As Capex Cuts Bite


By 2020, the limited exploratory capital expenditures of the past two and a half years will make meeting global oil demand difficult, according to a report by the International Energy Agency on Monday.

Growing global demand paired with a contraction in new oil projects in 2015 and 2016 will cause a “supply crunch” if new projects do not get approved soon, according to the five-year outlook included in the “Oil 2017” report.

A majority of short-term supply growth will come from American shale producers set to increase output by 1.4 million barrels by 2022 even if Brent barrel hovers around $60.

"The United States responds more rapidly to price signals than other producers. If prices climb to $80 a barrel, U.S. light tight output [or shale] production could grow by 3 million bpd in five years," the agency said.

The forecasted growth in U.S. production could quickly be stifled by a second steep price drop, but oil prices have been in a positive trajectory since the Organization of Petroleum Exporting Countries’ production cuts went into effect in January. With or without a floor-shifting price change, volatility is unavoidable, according to IEA analysis.

"We are witnessing the start of a second wave of U.S. supply growth, and its size will depend on where prices go," IEA head Fatih Birol said. "But this is no time for complacency. We don't see a peak in oil demand any time soon. And unless investments globally rebound sharply, a new period of price volatility looms on the horizon."

Related: Oil Price, Sanctions Weigh on Russian Stocks, Moscow Unfazed

The number of active oil rigs in the U.S. has increased by 132 since the OPEC agreement was announced on November 30, as American drillers continue to ramp up while OPEC continues to hold its members largely to specified production caps.

By Zainab Calcuttawala for Oilprice.com

More Top Reads From Oilprice.com:

Join the discussion | Back to homepage

Leave a comment
  • JHM on March 07 2017 said:
    "The United States responds more rapidly to price signals than other producers. If prices climb to $80 a barrel, U.S. light tight output [or shale] production could grow by 3 million bpd in five years," the agency said.

    And if prices climb to $80/b, China and other EV makers would electrify enough buses, trucks and other vehicles to offset demand for 3 mbpd in five years. EVs are growing at about 60% per year, but if the price of oil were high enough, this could easily double.

    So the problem for the oil industry is how to keep oil prices low enough that vehicle electrification proceeds slowly, less than 25% per year growth. It is a bit incredulous that the IEA does not "see a peak in oil demand any time soon." This strictly depends on keeping the price of gasoline and diesel as low as possible for as long as possible. A period of high volatility would also accelerate electrification.

    So Fatih Birol is trying to warn the industry against complacency. Will investors make enough money trying to forestall peak demand? I don't know, but being overextended and oversupplied heading into peak demand could be a really hard landing.
  • Bill Simpson on March 07 2017 said:
    Even I can figure out that if you spend a lot less on oil exploration, you will discover less oil.
    A price spike is on the way. The only question is how many years away is it.
    It will be interesting to see if the higher prices can push back my guess of 2022 for peak oil production. Soon after the peak, the world economy will go into a tailspin. That fact, I can guarantee.
  • Geneo on March 07 2017 said:
    Good article. There could be a supply crunch but not because there is not enough oil production but because there is not enough oil production selling at $20 a barrel. As GDP shrinks so will high priced oil demand. Oil going forward will need to be cheap . But then $20 oil would be devastating to the world economy .

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play