For full coverage of Middle East business, see MEED
Low oil prices are having a profound impact on the pattern of global oil supply, the Paris-based International Energy Agency (IEA) said in a report released today.
“The latest data from the IEA showed that investments in the oil sector declined in 2015, and then again in 2016, the first consecutive two-year drop in three decades,” the IEA said. “The industry cut more than $300bn in spending in two years, or 42 per cent of the total, an unprecedented downturn, even taking into account significant reduction in costs. North America accounted for about half the drop. If prices remain at current levels, a significant rebound appears unlikely in 2017.”
The IEA said Middle East oil supply has reached historically high levels, exceeding 31m barrels a day (b/d).
“The region now accounts for 35 per cent of global oil supplies, the highest level since 1975,” the IEA said. “This growth in production, from Saudi Arabia, Iraq and Iran, highlights the fact that low-cost producers in the Middle East remain central to oil markets. Production from the Middle East is expected to account for most of the world’s demand growth this year.”
“… the lower oil and gasoline prices are also hurting energy efficiency trends in some countries, particularly in the transportation sector where they have given a boost to the sale of sport utility vehicles,’ the IEA said. “Consumers have moved away from energy-efficient vehicles that they favored when oil prices were higher. In the United States, SUV sales are now 2.5 times higher than light duty vehicles. In China, SUV sales are 4 times higher than light duty vehicle sales.