Global oil supply could struggle to keep pace with demand after 2020 unless new projects are approved soon.
That’s according to the latest five-year oil market forecast from the International Energy Agency (IEA), which says this would be likely to cause a sharp increase in prices.
The report suggests the global picture appears comfortable for the next three years but supply growth is expected to fall away considerably from 2020 onwards.
These supply and demand trends point to a tight global oil market in the future, with spare production capacity in 2022 potentially falling to 14-year lows.
The report says although oil supply is likely to grow over the next few years in countries like the US, Canada and Brazil, it could still stall by 2020 if the record two-year investment slump of 2015 and 2016 is not reversed.
It shows despite investments in US shale strongly picking up, early indications of global spending for 2017 are not promising.
Rising oil demand in the next five years could pose a risk, passing the symbolic 100 million b/d threshold in 2019 and reaching about 104 million b/d by 2022.
Developing countries are expected to account for all of this growth and it is thought electric vehicles won’t be able to offset any significant amounts of transportation fuel before 2022.
UK Chancellor Philip Hammond pledged support for North Sea oil and gas as well as funding for innovative research and development in the Spring Budget announcement yesterday.