IEA sees oil peak in 2035

Global oil supplies will come close to a peak by 2035 when oil prices will exceed $200 a barrel, the International Energy Agency said yesterday, as China and other emerging economies drive demand higher.
The IEA, in its 2010 World Energy Outlook, said it expected conventional crude oil output to flatten out in the next 10 years.

“Production in total does not peak before 2035, though it comes close to doing so,” the Paris-based IEA said in the executive summary of the report. That projection was according to the central scenario of the report.
The agency, which advises 28 industrialised countries, also raised its mid- and long-term oil price forecasts, despite slashing oil demand estimates by 2035, citing growing supply uncertainty.
Oil prices would rise even further if governments did not act to curb consumption, the IEA’s chief economist and lead author of the report, Fatih Birol, told Reuters in an interview.
“The message is clear, the price will go up, especially if consuming countries do not make changes in the way they consume oil, especially in the transport sector,” Birol said.
Oil hit $87.63 a barrel yesterday, the highest since October 2008, after hovering around $70-80 most of the year.

The world needed higher oil prices to change consuming habits substantially and spur investment as markets were becoming less sensitive to price changes, Birol said.
“All the net growth comes from non-OECD countries, almost half from China alone, mainly driven by rising use of transport fuels,” the IEA said in the report.
The growing concentration of oil use in transport and the shift of demand towards subsidised markets were limiting the scope for higher prices to choke off demand, the IEA said.
“If subsidy policy does not change, with increasing price assumptions, these $312bn in subsidies for 2009 will reach $600bn in 2015. That’s huge,” Birol said.
While the IEA saw higher prices, it also cut its world oil demand estimate for the next 25 years by 6mn barrels per day (bpd) to 99mn bpd.

That remained an increase of 15mn bpd, equal to one and a half times the output of top global producer Russia.
Conventional crude oil supply would flatten out in the next 10 years, the IEA said.

“Crude oil output reaches an undulating plateau of around 68-69mn barrels a day by 2020, but never regains its all time peak of 70mn barrels per day reached in 2006.”
Last year’s edition of the report said global oil production was not forecast to peak before 2030 and conventional oil production was “projected to approach a plateau towards the end of the projection period.”

Gulf-Times