The International Energy Agency (IEA) has revealed that it thinks a cycle of boom and bust in the oil industry is a likely outcome if the present cutback in new industry investment fails to be reversed.
The IEA has said that if more funds are not invested into sourcing and developing additional oil fields, demand could outstrip oil supply in the early 2020s. If this comes to pass, oil prices could once again rocket, according to the IEA.
Investment in brand new supplies in 2015 was at the lowest it has ever been in around 60 years, which, along with current over-supply of oil, has not helped with the current slump in oil prices.
The IEA in its World Energy Outlook report says:
“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.”
Oil prices have fallen a long way since the summer of 2014, when a barrel of oil was fetching $100. Earlier in 2016, oil was bringing in just $30 per barrel, and right now, they are between $40-50 depending on the markets.
This has caused investment to fall from highs of $780bn in 2014 to just $440bn in 2016, pricking the ears of energy producing companies and oil giants like ExxonMobil, which makes Mobil Delvac Super 1400 15W/40.