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Page added on May 18, 2014
IEA predicts oil shortage unless supply boosted
Industrialised countries could be facing the prospect of an oil supply squeeze and higher prices later this year unless production is lifted, according to a report just released by the International Energy Agency.
In its latest Oil Market Report, the IEA says recent production gains will not be sufficient to meet market needs in the second half of the year when consumption picks up.
“Crude prices remain elevated and forecast balances call for a significant rise in OPEC production from current levels for the second half of the year,” the IEA said.
The IEA says OPEC nations will have to increase third quarter production by another 900,000 barrels per day from current levels to 30.7 million barrels per day to meet the expected demand.
“While OPEC has more than enough capacity to deliver, it remains to be seen whether it will manage to overcome the above-ground hurdles that have plagued some of its member countries lately,” the report added.
The OPEC cartel controls about 40 per cent of global oil supplies and includes members such as Libya and Iraq, which have struggled to maintain exports.
Furthermore, intensifying political turmoil in non-OPEC nations, Colombia and South Sudan, and technical problems in Kazakhstan have added to the supply problems.
The IEA noted that ongoing tensions between Russia and Ukraine have also helped push up oil prices recently.
The agency says surging Chinese demand is also having a significant impact, with imports reaching record levels of 6.8 million barrels per day last month.
“How Chinese importers plan to use those barrels remains an open question,” the report noted.
The IEA says reports out of China suggest that it has increased budget allocations to fill its recently completed strategic petroleum reserve facilities.
However, China also has a rapidly growing and under-utilised refining industry, with two new giant plants adding to the surplus capacity.
The IEA says rather than just going into strategic reserves, the oil could quickly find its way back onto global markets.
“Having become net exporters of key products in March, (Chinese) refiners may simply be planning to make more use of their plants, setting the stage for even higher product exports,” the agency speculated.
“In that case too, consumers will enjoy more supply, but the effect on international markets will play out differently.”
11 Comments on "IEA predicts oil shortage unless supply boosted"
Norm on Sun, 18th May 2014 9:53 pm
OK, lets boost the supply of oil. I have an old bottle of olive oil, at the back of my kitchen cupboard. Will that boost the supply?
Perk Earl on Sun, 18th May 2014 11:48 pm
Get that red queen moving!
Plantagenet on Mon, 19th May 2014 12:01 am
Its been six years now since 2008—its about time for another energy crisis.
GregT on Mon, 19th May 2014 12:59 am
It’s the same crisis Plant, and it’s going to continue to get worse as time goes on.
Meld on Mon, 19th May 2014 1:07 am
I’d love to be as ignorant as plant. The world must be such an exciting place.
shortonoil on Mon, 19th May 2014 11:25 am
“IEA says recent production gains will not be sufficient to meet market needs in the second half of the year when consumption picks up.”
The IEA is basing this forecast on estimates that world GDP will be growing at 4.5% per year during the fourth quarter. More leveled headed projections put the fourth quarter growth rate at -0.6%; therefore, we are not likely to see much increase in demand in the near future. They are correct in thinking that prices are likely to increase this year. The cost of production keeps increasing as wells get deeper, water cut increases, and fields with ever higher depletion rates continue to come on line. Higher depletion rates translate into higher per unit production costs.
Because production cost increases are continuing to out pace price increases, producing nations will be in an ever more difficult position when it comes to lifting production. This squeeze will mean that it is highly unlikely that OPEC will, or can increase production by 900K barrels per day. Increasing production in the face of increasing production cost, and lagging prices doesn’t make good economic sense. It appears that the IEA is still indulging in the BAU Kool Aid!
http://www.thehillsgroup.org
Northwest Resident on Mon, 19th May 2014 11:47 am
“Increasing production in the face of increasing production cost, and lagging prices doesn’t make good economic sense.”
What is to prevent the US Fed from simply printing up another trillion $$$ or so and slipping it under the table to KSA (and other OPEC members) to help them make ends meet? What could possibly go wrong with that?
pat on Mon, 19th May 2014 12:38 pm
the oil crisis of 2015 is going to collapse the world as we known. all the crisis seen yet in past will look nothing in compared to oil crisis of 2015. learn grow own food…
shortonoil on Mon, 19th May 2014 3:50 pm
“What could possibly go wrong with that?”
Probably nothing, until the rest of the world finds out that the US is exporting its inflation to pay for its oil. It could turn out to be the final nail in the coffin of the petro-dollar hegemony? But, they will probably try it anyway!
The audaciousness of the Washington cabal is astounding. God complex?
Davy, Hermann, MO on Mon, 19th May 2014 9:00 pm
Short around here we say “Inbred”
GregT on Mon, 19th May 2014 10:27 pm
“Probably nothing, until the rest of the world finds out that the US is exporting its inflation to pay for its oil.”
Much of the rest of the world already knows that. It’s the general public that hasn’t quite figured it out yet.