x Abu Dhabi, UAETuesday 25 July 2017

Energy supply investment of $48 trillion needed by 2035, says IEA

Potential shortfall in investment in production in the Middle East could create a $15 spike in the oil price by 2035.

North American oil production has expanding, riding the gains in production from shale reserves tapped by hydraulic fracturing, or fracking. Above, an oil well in North Dakota in the US. Karen Bleier / AFP
North American oil production has expanding, riding the gains in production from shale reserves tapped by hydraulic fracturing, or fracking. Above, an oil well in North Dakota in the US. Karen Bleier / AFP

The world needs to spend US$48 trillion on energy supply investment by 2035, the International Energy Agency said today.

The prediction in the World Energy Investment outlook report highlights the crucial importance of Middle East oil production over the next decade.

A potential shortfall in investment in production in the Middle East could create a $15 spike in the oil price by 2035, it warns.

The emergence of tight oil in North America and new deepwater conventional supplies from Brazil have “put oil developments in the Middle East somewhat in the shade in recent years”.

But the region is expected to be thrust back in the spotlight over the next decade, as meeting long-term growth in oil demand relies increasingly on large conventional reserves in the Middle East.

“The prospects for a timely increase in oil investment in the Middle East are uncertain: there are competing government priorities for spending, as well as political, security and logistical hurdles that could constrain production,” the report said.

If production does not increase as needed, oil prices are likely to rise as a result.

“If investment fails to pick up in time, the resulting shortfall in supply would create tighter and more volatile oil markets, with prices that are $15 per barrel higher on average in 2025.”

scronin@thenational.ae

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