Underinvestment Dogs Oil Sector

The decline in surplus oil capacity and a subsequent upturn in upstream activity has been a fundamental expression of the long-term relationship between investment and price:

– Supply. According to the U.S. Energy Information Administration (EIA), world surplus oil production capacity fell in 2003, and since then, it has failed to recover substantially. Over the next two to three years, surplus capacity is expected to recover only gradually and remain concentrated in the hands of Saudi Arabia, the leader of the Organization of the Petroleum Exporting Countries (OPEC).

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