Oil market to start rebalancing in 2017: IEA

Oil markets will start to rebalance in 2017, but upstream investment cuts because of the current low crude prices will eventually pose supply security risks, the International Energy Agency (IEA) said in its annual medium-term report released on Monday.

“It is easy for consumers to be lulled into complacency by ample stocks and low prices today, but they should heed the writing on the wall: the historic investment cuts we are seeing raise the odds of unpleasant oil-security surprises in the not-too-distant-future,” said IEA executive director, Fatih Birol, launching the report. 

As many as 4.1 million barrels a day (mb/d) could be added to global oil supply between 2015 and 2021, down from the total growth of 11 mb/d in the period 2009-2015, the report said.

Global oil exploration and production capital expenditures are expected to fall 17 percent in 2016, following a 24 percent cut in 2015 – which would be the first time since 1986 that upstream investment has fallen for two consecutive years, it said.

The United States remains the largest contributor to supply growth through 2021, accounting for more than two-thirds of the net non-OPEC increase. Iranian oil output will rise 1 mb/d to 3.9 mb/d by 2021, the report estimated.

Global oil demand is expected to grow at an average rate of 1.2 mb/d through 2021, crossing the symbolic 100 mb/d mark towards the end of the decade before reaching 101.6 mb/d by 2021.

Global oil trade continues its pivot towards Asia, the report said.

“Indian consumption races ahead as more motorists take to the roads, while Chinese demand growth cools in tandem with the economy.”