IEA Projects A 75% Increase in Oil Prices by 2020

7/19/2017 IEA Projects a 75% Increase In Oil Prices By 2020
TRADE CFDS ON COMMODITIES, Open your account

FX, INDICES AND SHARES
Regulated by DFSA, registered in DIFC
Energy / #PowerUp
NOV 30, 2016 @ 07:30 AM 17,799
IEA Projects a 75%

Increase In Oil Prices
By 2020
Robert Rapier, CONTRIBUTOR
I write about energy, the environment, and the
economy. FULL BIO
Opinions expressed by Forbes Contributors are their own.
TWEET THIS
The past 30 years have seen global crude oil

demand grow fairly steadily by a total of about
35 million bpd
India is projected to be the largest source of

demand growth for oil (as well as coal), with a
6 million bpd increase
https://www.forbes.com/sites/rrapier/2016/11/30/iea-projects-a-75-increase-in-oil-prices-by-2020/#7af182ad7a67 1/27
Compare Your Retirement Readiness
Traders work on the floor of the New York Stock Exchange (NYSE) [+]
in New York, U.S., on Tuesday, Nov. 29, 2016. Oil slid below $46
In the previous article, I discussed the recent

release of the International Energy Agencys
(IEA) 2016 World Energy Outlook (WEO).
The annual WEO report projects future
energy consumption, production, and
pricing trends based on different future
scenarios. Today I will highlight the IEA's
outlook for the oil markets.
This year's report considered three general

scenarios, described in greater detail in the
previous article. The Current Policies
Scenario (CPS) depicts a path for the global
energy system based on policies or measures
in place as of mid-2016. The New Policies
Scenario (NPS) assumes that government
pledges such as those made in response to
the Paris Agreement on climate change will
be reflected in legislation.
The report also looked at the changes that

would be required in the energy sector to
limit the concentration of greenhouse gases
in the atmosphere to around 450 parts per

million (ppm)-- the maximum estimated
level that can be allowed to keep the global
temperature rise to less than 2C.
The baseline 2015 oil demand used in the

report was 92.5 million barrels per day
(bpd). Demand for oil is forecast to increase
under both the CPS and NPS, which is
consistent with my own expectations. The
past 30 years have seen global crude oil
demand grow fairly steadily by a total of
about 35 million bpd .
Extrapolating the same rate of increase

would imply global oil demand of about 120
million bpd in 2040. And in fact, the CPS
estimates oil demand at 117 million bpd by
then (along with another 3.6 million bpd of
biofuel demand). Electric vehicles are
forecast to rapidly increase in number, but
market share grows slowly because of a large
overall
increase in the number of
automobiles globally (a point I argued
in Think Electric Vehicle Growth Will
Dampen Thirst For Oil?)
The NPS assumes slower growth in oil

demand, to 103 million bpd in 2040 (along
with 4.2 million bpd of biofuels). Oil demand
is forecast to grow at a compounded annual
rate of 0.5% in the NPS and 1% annually
under current policies.
For reference, the 450 Scenario would

require oil demand to fall to 73 million bpd
by 2040 -- highlighting the large gap
between the commitments in the Paris
Agreement and actions required to arrest the
atmospheric carbon dioxide concentration at
450 ppm.
Demand for biofuels is projected to more

than double from current levels in either
case, but demands to roll back some of the
aggressive biofuel mandates of the past
decade have gained some momentum. So
even the lower growth scenario for biofuels
may be too optimistic, conditioned as it is on
continuing government support.
Oil demand in advanced economies is

projected to fall by almost 12 million bpd by
2040, but is expected to be more than offset
by increased crude consumption in
developing regions. India is projected to be
the largest source of demand growth for oil
(as well as coal), with a 6 million bpd
increase under the NPS. Demand in
Africa is projected to grow at the fastest rate,
averaging 2.2% per year. However, the
largest volume increase is projected to come
from Asia, which is expected to require an
extra 12.5 million bpd by 2040. Asia alone is
expected to more than offset the decline in
demand from advanced economies.
The IEA report also warns about the

potential for a near-term oil price shock as
investment falls short of what is needed to
keep up with growing demand. If new
project approvals remain low for a third year
in a row in 2017, it will be hard to meet the
expected demand in the early 2020s without
setting off a new boom/bust cycle, according
to the agency. In other words, because of a
three- to six-year lag time in the oil industry
between the investment decision and the
resulting production, underinvestment today
could lead to an oil price shock around 2021.
Under the CPS, even without an oil price

shock the global price of crude oil is
projected to rise to $82 per barrel by 2020,

$127/bbl by 2030, and $146/bbl by 2040.
The NPS assumes policies that will cause
global oil demand to be lower than in the
CPS. As a result, oil prices are projected to
rise to $79/barrel (bbl) by 2020, $111/bbl by
2030, and $124/bbl by 2040.
Even in the NPS -- the case that is more

bearish for oil -- oil prices are forecast to rise
~75% from current levels in the next three
years. Combined with risk of another oil
price shock in the early 2020s, this is quite a
bullish forecast for the oil industry over the
next five years or so.
(Follow Robert Rapier on Twitter, LinkedIn,

or Facebook.)
PAGE 1 / 2 Continue
1 Comment on this story
Send Us Feedback Report Corrections Reprints & Permissions
RELATED TOPICS
1. OIL CHANGE 4. OIL AND

SAVINGS GAS
2. CRUDE OIL 5. INVESTMEN

FUTURES T IN OIL
3. CURRENT 6. BEST
HEATING COCONUT
From the Web Ads by Revcontent
Millions of People Are Why Doctors in the (1) Weird Trick to 9 Ways To Lose Belly
Cancelling Their Know No Longer Regrow Hair Every Fat When You're
Netflix Account Prescribe Metformin Night (Do This Daily) Crazy Busy
Because
MY FINANCEof This One
TODAY (Watch)
VEDDA BLOOD SUGAR FOLLICLERX TODAYSDIETS
Our Swedish Student How to Vanish What Happens When United Arab Emirates
Made $85,000 This Varicose Veins in 3 You Do Planks Every : New Diabetes
Month. Discover His Days Day? Discovery Leaves
Method Now
FREE CASH SYSTEM VARICOFIX TODAYSDIETS Doctors Speechless
TYPE 2 DIABETES DESTROYER
What is this?
Leadership
MAY 9, 2017 @ 06:13 PM
My Schoolteacher Parents Taught Their

Students To Unleash Their Inner Heroes

IEA Projects A 75% Increase in Oil Prices by 2020

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

IEA Projects A 75% Increase in Oil Prices by 2020

Uploaded by

Copyright:

Available Formats

7/19/2017 IEA Projects a 75% Increase In Oil Prices By 2020

TRADE CFDS ON COMMODITIES, Open your account

IEA Projects a 75%

The past 30 years have seen global crude oil

India is projected to be the largest source of

Compare Your Retirement Readiness

In the previous article, I discussed the recent

This year's report considered three general

The report also looked at the changes that

in the atmosphere to around 450 parts per

The baseline 2015 oil demand used in the

Extrapolating the same rate of increase

The NPS assumes slower growth in oil

For reference, the 450 Scenario would

Demand for biofuels is projected to more

Oil demand in advanced economies is

The IEA report also warns about the

Under the CPS, even without an oil price

projected to rise to $82 per barrel by 2020,

Even in the NPS -- the case that is more

(Follow Robert Rapier on Twitter, LinkedIn,

Send Us Feedback Report Corrections Reprints & Permissions

1. OIL CHANGE 4. OIL AND

2. CRUDE OIL 5. INVESTMEN

From the Web Ads by Revcontent

My Schoolteacher Parents Taught Their

You might also like