Oil to rise above $100/bbl amid uncertainty over energy - IEA

09 November 2010 12:23  [Source: ICIS news]

Oil prices could rise above $100/bblLONDON (ICIS)--The price of oil is expected to rise above $100/bbl as the strength of the global economic recovery holds the key to how energy markets will evolve over the next few years, the executive director of the International Energy Agency (IEA) said on Tuesday.

“The Copenhagen Accord and the agreement among G20 countries to phase out subsidies are important steps forward. But, these moves still fall a very long way short of what is required to set us on the path to a truly sustainable energy system,” said Nobuo Tanaka at the launch of the latest edition of the IEA’s annual World Energy Outlook.

According to the report, the oil price is set to rise, reflecting the growing insensitivity of both demand and supply to price.

The average IEA crude oil price is expected to increase to $113/bbl (in year-2009 dollars) in 2035 from just over $60/bbl in 2009.

Oil demand is expected to continue to grow steadily, reaching about 99m bbl/day by 2035  15m bbl/day higher than in 2009.

In the IEA’s new policies scenario, non-OECD (Organisation for Economic Cooperation and Development) countries would account for 93% of the projected increase in world primary energy demand.

China – which IEA preliminary data suggest overtook the United States in 2009 to become the world’s largest energy user despite its low per capita energy use – would contribute 36% to the projected growth in global energy use, the IEA said.

“It is hard to overstate the growing importance of China in global energy. How the country responds to the threats to global energy security and climate posed by rising fossil-fuel use will have far-reaching consequences for the rest of the world,” said Tanaka.

In this new scenario, world primary energy demand would increase by 36% between 2008 and 2035, or 1.2% per year on average. The assumed policies would make a tangible difference to energy trends, with demand growing by 2% per year over the previous 27-year period.

The IEA said oil would remain the leading fuel in the energy mix by 2015, followed by coal. It added that of the three fossil fuels, gas consumption would grow most rapidly, with its share of total energy use almost reaching that of coal.

What will shape the future of energy in the longer term are government actions and their effects on technology, the price of energy services and end-user behaviour, Tanaka said.

“We need to use energy more efficiently and we need to wean ourselves off fossil fuels by adopting technologies that leave a much smaller carbon footprint,” Tanaka added.

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By: Hilde Ovrebekk
+44 20 8652 3214

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