The International Energy Agency (IEA) is warning consumers of a hike in oil prices and supply security risks.
In its latest Medium Term Oil Market Report, the IEA said it expects prices to start recovering in 2017 as the market “will begin rebalancing”.
It notes that while oil prices should start to rise gradually, the availability of resources that can be easily and quickly tapped “will limit the scope of rallies, at least in the near term”.
However it points to the risk of an oil price spike in the later part of the outlook period as a result of insufficient investment.
Executive Director Fatih Birol said: “It is easy for consumers to be lulled into complacency by ample stocks and low prices today but they should heed the writing on the wall: the historic investment cuts we are seeing raise the odds of unpleasant oil security surprises in the not-too-distant future.”
The report forecasts 4.1 million barrels a day (mb/d) of oil to be added to global supply between 2015 and 2021.
That’s down sharply from the total growth of 11 mb/d in the period 2009 to 2015.
Global oil exploration and production capital spending is also expected to fall 17% this year, following a 24% cut last year.
Despite a dip in US output in the short term, it could see production reaching an all-time high of 14.2mb/d 2021.
The report adds global oil demand could grow at an average rate of 1.2mb/d through 2021 before reaching 101.6mb/d by 2021.