Low oil prices risk causing a lack of investment in conventional oil supply in non-OPEC countries, strengthening OPEC market power and creating additional uncertainty, the IEA’s director for energy markets and security, Keisuke Sadamori, said Tuesday.
The shale and tight oil revolution in the US had provided a welcome element of flexibility and elasticity to markets, Sadamori told the Offshore Europe conference in Aberdeen.
However, “if we see quite a substantial decline in upstream investment in conventional sources in non-OPEC countries, then the power to supply the marginal barrel will go back to the hands of the OPEC producers and they are also facing the extremely difficult unstable geopolitical situation,” he said.
“Ensuring the security of supply supported by robust upstream and downstream investments will continue to be the priority and that’s going to be a huge challenge in the coming decades,” he said.
The IEA last month said it expected global markets to be over-supplied well into next year thanks to growing oil inventories, despite revising upwards its projections for global demand.