The price of oil: the IEA could push raw material for growth

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The international energy Agency (IEA) has released long-term forecast of the situation on the world oil market for the next five years. According to the forecast, to 2023 the global demand for oil will grow by 6.9 million barrels a day and will be 104,7 million barrels per day. Thus, the demand for oil in the middle East will grow by 1.1 million barrels per day in the next five years. At roughly the same pace will increase the demand for oil in India and China and in the United States by 0.5 million barrels per day.
The main growth drivers of demand for oil, according to the Agency, will be the development of the petrochemical industry in Asia, and rising demand for air travel in the Pacific rim countries, and, as a consequence, the growth of production and consumption of jet fuel. Earlier, the IEA raised its forecast of growth in global oil demand in 2018, from 1.3 to 1.4 million barrels per day.
Apparently, the Agency believes that oil shortage in the next five years, the world is not in danger, although the Agency makes a reservation about a possible drop in oil production in 2018 in Venezuela, as well as in Angola and Libya. Even the fact that the world is less of discoveries of conventional oil with a high level of reserves, the Agency is not confused – according to experts IEA, the lack of conventional oil in the world eventually will be fully replenished by the production of shale oil in the United States and several other countries – Brazil, Canada, and even, perhaps, in Australia and Norway (the latter, according to several authoritative expert estimates, by 2022, threatening a serious shortage of conventional oil).
However, this year the Agency estimates are quite optimistic, although with some reservations, the prospects for continued high oil prices. Earlier, the head of the Agency’s Fatih Birol said that in 2018, the decrease in oil production in Venezuela and the agreement OPEC+ may cause an increase in oil prices to $70 per barrel. The growth of shale oil in the US looks like a medium-term threat to growth in oil prices, but growing demand could absorb and even exceed-growing supply.
In the longer term you can remember, like 5-6 years ago all the world’s media talked about the “shale revolution” in the gas market, and then made forecasts regarding the growth of gas supplies from the US to Europe. The result, by the end of 2017, Gazprom restored and even increased its share on the European gas market, and the US is already buying Russian natural gas due to the abnormally cold winter. In the near future, we expect that Brent oil will be traded in the corridor of $64-$65 per barrel.
Natalia Milchakova,
The Deputy Director of analytical Department,