IEA Says Oil Boom Bust Cycle Likely if Investment Remains Low

A new oil industry boom-and-bust cycle is likely if the current reduction in new investment is not reversed, says the International Energy Agency.

The IEA says unless more money is spent exploring for, and developing, new oil fields, then demand may outstrip supply in the early years of the next decade.



That could see oil prices surging again, says the IEA, which represents 29 energy-producing countries.
Investment in new oil supplies last year was at its lowest since the 1950s.

“We estimate that, if new project approvals remain low for a third year in a row in 2017, then it becomes increasingly unlikely that demand… and supply can be matched in the early 2020s without the start of a new boom/bust cycle for the industry,” says the IEA’s World Energy Outlook report.

Over-supply of oil has driven down crude prices in recent years.

They have fallen from their recent peak of more than $100 a barrel in 2014, to less than $30 a barrel earlier this year.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza