Abu Dhabi: Oil prices won’t rebound to $100 a barrel before 2020 to 2025, when US shale production will gradually start to decline, according to a former head of the International Energy Agency (IEA).
Demand for crude in China, India, Southeast Asia and Africa will drive up global prices in the “long term,” Nobuo Tanaka, who served for four years as the IEA’s executive director, said in an interview in Abu Dhabi. Tanaka left the IEA, an advisory body to the world’s industrialised nations, in September 2011 and currently works as a professor at the University of Tokyo School of Public Policy.
“Price will not go up to a hundred as easily as before,” Tanaka said. “The shale production in the US will gradually slow down after 2020 or 2025, so again there’s a chance of higher prices coming after that.”
Brent crude, a global pricing benchmark, dropped 44 per cent in the last 12 months and was 20 cents higher at $50.06 a barrel on Tuesday in London at 12:01pm local time. The Organisation of Petroleum Exporting Countries (Opec), led by Saudi Arabia, decided on June 5 to keep its crude production target unchanged to force higher-cost producers such as US shale companies to cut back. The producer group has exceeded its target for 16 consecutive months, data compiled by Bloomberg show.
The gap between crude oil supply and demand will continue until the end of the year, and a supply shortfall may develop in the third or fourth quarter of 2016, Tanaka said. “Until that time, if the current situation continues, the price will stay as low as the current one.”
