Medium-Term Oil Market Report 2016
In early 2016 crude oil prices for WTI and Brent fell below $30/bbl for the first
time since 2003, having halved in just a few months. In a departure from the past
four decades, producers continue to produce and sell what they can, letting the market
set the price. Low prices are a major short-term benefit to consumers and will provide
a boost to demand growth. But if low prices persist, investments in new supply are
cut back – as has been demonstrated recently by a succession of announcements from
major companies. Unless the heavily oversupplied oil market can return to balance
and high levels of stocks start to diminish, oil prices cannot rise to the levels
necessary to support investments in the higher cost resources that must be developed
to meet rising oil demand. The result could be a sharp rise in oil prices that risks
curtailing economic growth.
In the 2016 edition of its Medium-Term Oil Market Report, the International Energy
Agency analyses the key factors impacting the supply and demand for oil from today
out to 2021. These include: high-cost supply resilience from light, tight oil producers
in the United States; the lifting of nuclear sanctions on Iran; the impact on demand
of lower oil prices – including recent subsidy changes in the Middle East; and the
timing of the oil market’s return to balance. This report is published during one
of the most fascinating periods in oil market history.
Published on February 22, 2016
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