This outlook does not include potentially higher Iranian output in the case of sanctions being lifted.

The IEA

Categorized in : Energy

The impact of oil's steep price plunge on end users is unlikely to be repeated and economic conditions are forecast to remain problematic in countries such as China.

The oil price in this scenario remains close to $50 a barrel until the end of this decade, before rising gradually back to $85 a barrel in 2040, in the low-oil price scenario, the Middle East's share in the oil market ends up higher than at any time in the last forty years.

A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels - should international sanctions be eased - are likely to keep the market oversupplied through 2016.

Total non-OPEC output next year is expected to contract by nearly 0.5 million bpd as global upstream spending cuts of more than 20 percent impact both new projects and existing production.

With Riyadh showing little inclination to abandon its policy to defend volume rather than price and Iraq striving to at least sustain its record rates, overall OPEC supply looks set to hover around 31.5 million bpd during the coming months.

Oil's price collapse is closing down high-cost production from Eagle Ford in Texas to Russia and the North Sea.

The big story this month is one of tightening supply, with the spotlight firmly fixed on non-OPEC, oil's price collapse is closing down high-cost production from Eagle Ford in Texas to Russia and the North Sea, which may result in the loss next year of half a million barrels a day - the biggest decline in 24 years.

We expect China, the world's second-largest oil consumer, to keep up its crude purchases despite the recent stock market collapse, currency devaluation and steady stream of negative macroeconomic news. Beijing could also buy extra crude to fill up its strategic reserves.

While there is unlikely to be a substantial boost in Iranian production before next year, oil held in floating storage could start to hit world markets before then.

While a rebalancing has clearly begun, the process is likely to be prolonged as a supply overhang is expected to persist through 2016 - suggesting global inventories will pile up further.

While a drop in costs and efficiency improvements will help to offset some of the spending cuts, output is likely to take a hit soon.

Our latest balances show that while the overhang will ease from a staggering 3.0 million bpd in the second quarter of 2015, its highest since 1998, the projected oversupply persists through the first half of 2016.

In 2015-2016, net capacity additions will be more than needed, which will cause the global utilization rate to decline, and casts a doubt on the continuation of current unusually high refining margins.

The oil market was massively oversupplied in 2Q 2015, and remains so today, it is equally clear that the market's ability to absorb that oversupply is unlikely to last. Onshore storage space is limited.

The experience of the past two years has opened the gas industry'... by The IEA

The experience of the past two years has opened the gas industry's eyes to a harsh reality.

Despite tentatively bullish signals in the United States, and barring any unforeseen disruption elsewhere, the market's short-term fundamentals still look relatively loose.

Several large LTO producers have been boasting of achieving large reductions in production costs in recent weeks. At the same time, producer hedging has reportedly gone steeply up, as companies took advantage of the rally to lock in profits, it would thus be premature to suggest that OPEC has won the battle for market share. The battle, rather, has just started.

In the supposed standoff between OPEC and U.S. light tight oil (LTO), LTO appears to have blinked. Following months of cost cutting and a 60 percent plunge in the U.S. rig count, the relentless rise in U.S. supply seems to be finally abating.

On the face of it, the oil price appears to be stabilizing. What a precarious balance it is, however, behind the façade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly.

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On the face of it, the oil price appears to be stabilising. What a precarious balance it is, however, behind the façade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly.