Oil prices will eventually climb back to $80 a barrel, according to the World Energy Outlook, an annual report released Tuesday by the International Energy Agency. ‘Their outlook, and their kind of central projection scenario is that we’re only going to see oil prices gradually recover. It’s going to take the rest of this decade to get up to about $80 a barrel,’ said Richard Mallinson, Geopolitical Analyst with Energy Aspects in London, who noted that’s below the $100 a barrel level we’ve seen in the last few years. ‘Then they are going to continue rising through the next couple of decades because oil demand is still growing,’ he added. But the pace of that growth will slow. Mallinson agreed with the IEA’s assessment that demand growth will settle back to a million barrels a day. ‘They see in the backdrop a big move to less energy-intensive economic growth around the world, in places like China and the emerging economies being less reliant not only on oil, but coal and gas,’ he explained. Of course, low oil prices have impacted supply, with oil companies around the world scaling back on investments. ‘In the U.S. we’re already seeing tight oil production falling and it’s beginning to fall quite rapidly, ‘ said Mallinson, who expects to see declines in overall non-OPEC oil supply in the second half of next year. The IEA also sees a bigger push toward renewable energy starting within the next decade.
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