International Energy Agency warns of future instability as low price of Brent crude deters investment in new oilfields. The world could face an oil supply shortage by the end of the decade, triggering large swings in the price of the commodity, the International Energy Agency has warned.
In its annual publication World Energy Outlook, detailing expectations for global energy trends, the IEA warned that the recent low price of oil could have serious ramifications within years.
A barrel of Brent crude has more than halved in price since early 2014 from $112 (£90) to around $44 in mid-November this year, having fallen to $32 earlier in the year amid oversupply.
The IEA said this was deterring oil companies from investing in new oilfields, a trend it said could turn the global oil glut into a supply shortage within years.
Between 2000 and 2014, oil companies approved an average of $15bn of new projects a year but that figure fell to just $6.5bn last year, a level not seen since the 1950s.
“As things stand, two years of low approvals is manageable but what we warn about is if investment stays low in 2017,” said Tim Gould, one of the report’s authors.
He said the drop-off in investment would be felt in a few years’ time, when projects that never got off the ground due to the low oil price would otherwise have come to fruition.