Oil entering a period of renewed uncertainty: IEA

Oil markets are entering a period of renewed uncertainty and volatility, including a possible supply gap in the early 2020s, the International Energy Agency (IEA) said in its World Energy Outlook 2018 report, released on Tuesday.

The report details global energy trends and what possible impact they will have on supply and demand, carbon emissions, air pollution, and energy access.  

The report shows oil consumption growing in coming decades, due to rising petrochemicals, trucking and aviation demand. But meeting this growth in the near term means that approvals of conventional oil projects need to double from their current low levels.

“Without such a pick-up in investment, US shale production, which has already been expanding at record pace, would have to add more than 10 million barrels a day from today to 2025, the equivalent of adding another Russia to global supply in seven years – which would be an historically unprecedented feat,” it maintained.

The report added major transformations are underway for the global energy sector, from growing electrification to the expansion of renewables, upheavals in oil production and globalization of natural gas markets.

“Across all regions and fuels, policy choices made by governments will determine the shape of the energy system of the future,” the report noted.

Demand for natural gas is on the rise, erasing talk of a glut as China emerges as a giant consumer. Solar PV is charging ahead, but other low-carbon technologies and especially efficiency policies still require a big push, the report maintained.

“Our analysis shows that over 70 percent of global energy investments will be government-driven and as such the message is clear – the world’s energy destiny lies with government decisions,” said Dr Fatih Birol, the IEA’s Executive Director.

“Crafting the right policies and proper incentives will be critical to meeting our common goals of securing energy supplies, reducing carbon emissions, improving air quality in urban centers, and expanding basic access to energy in Africa and elsewhere.”