Oil prices could reach $150 a barrel in the near term if investment in the Middle East and North Africa (MENA) oil-producing region falls significantly, the International Energy Agency (IEA) said.
The IEA, adviser on energy policy to major oil-consuming countries, said world demand for oil would rise steadily over the next two decades to around 99 million barrels per day (bpd) by 2035, and investment in new production would have to keep up. “If between 2011 and 2015 investment in the MENA region runs one-third lower than the $100 billion per year required, consumers could face a near-term rise in the oil price to $150 per barrel,” the IEA said in its annual World Energy Outlook.
Oil prices have been historically high this year, with North Sea Brent crude oil futures averaging well over $100 per barrel, partly due to the loss of oil production from Libya during its civil war. IEA Economist Fatih Birol said high oil prices threatened to curb economic growth worldwide. “In 2011, $102 is the average price through to today which means the global economic recovery is at risk. We are in the danger zone for the global economy at current levels,” Birol told a news conference. “There is a possibility that production growth from the (MENA) region may not be what the consumers would like to see. This would be a pity for the global economy, a pity for the oil sector and a pity for those governments.” “Oil prices by 2015 may go to $150 in real terms and $176 in norminal terms (if investment is too low),” he said. In the short term, the IEA said pressures on oil prices were easing as Libyan oil began to return to the world market and as global economic growth slowed.
But in the longer term oil prices were likely to rise. The IEA raised its assumptions for the price of oil in 2035 to around $212 per barrel from $204 a year ago. Production of oil from conventional sources, such as traditional oil wells, would fall gradually, it said, dropping to around 68 mbpd by 2035, 0.5 mbpd lower than its forecast in last year’s IEA report. “We think the major problem facing the oil sector, in addition to big oil demand growth, is decline in the existing fields,” Birol said. “In the next 25 years, the equivalent of 47 mbpd of oil will (be lost). This means we have to find and develop 47 mbpd to stay where we are today. We have to find and develop two new Middle Easts – that’s a tall order.” The IEA said it expected global demand for gas to grow 1.7 percent per year to 4.75 trillion cubic metres by 2035.
However, in the short term, a glut of gas from unconventional sources, such as shale gas, would keep pressure on gas prices. It forecast supplies of gas from unconventional sources would increase to more than 20 percent of total gas production by 2035, from around 13 percent in 2009.