Oil prices will rebound to more than $100 a barrel as soon as the world economy recovers, and will exceed $200 by 2030, the International Energy Agency will say in its flagship report to be published next week.

While market imbalanOil prices will rebound to more than $100 a barrel as soon as the world economy recovers, and will exceed $200 by 2030, the International Energy Agency will say in its flagship report to be published next week.

While market imbalances could temporarily cause prices to fall back, it is becoming increasingly apparent that the era of cheap oil is over,” the report states.

The developed world’s energy watchdog has doubled its long-term price expectation from last year’s $108 a barrel for 2030 and assumes oil prices will rebound from today’s $60-$70 a barrel to trade, in real terms adjusted by inflation, at an average of more than $100 a barrel from 2008 to 2015.

The IEA’s World Energy Outlook has come to this conclusion largely because it believes companies will struggle to pump enough new oil to offset the steep production declines of the world’s older fields.

“Current global trends in energy supply and consumption are patently unsustainable,” the report states.

My comment: The report will also say that the decline rate for operating fields is around 9%. That means that the world will have to find and bring on line the equivalent of a Saudi Arabia each and every year just to make up for natural depletion. Any growth in demand would have to be satisfied by additional supply. The recent decline in oil prices is temporary and is giving astute investors an excellent opportunity to acquire cheap in the ground reserves. Another problem that is not addressed is that the recent price decline in oil has many companies canceling or postponing development of new oil fields. This in my opinion will only exacerbate the problem and force prices even higher when demand picks back up. ces could temporarily cause prices to fall back, it is becoming increasingly apparent that the era of cheap oil is over,” the report states.

The developed world’s energy watchdog has doubled its long-term price expectation from last year’s $108 a barrel for 2030 and assumes oil prices will rebound from today’s $60-$70 a barrel to trade, in real terms adjusted by inflation, at an average of more than $100 a barrel from 2008 to 2015.

The IEA’s World Energy Outlook has come to this conclusion largely because it believes companies will struggle to pump enough new oil to offset the steep production declines of the world’s older fields.

“Current global trends in energy supply and consumption are patently unsustainable,” the report states.

My comment: The report will also say that the decline rate for operating fields is around 9%. That means that the world will have to find and bring on line the equivalent of a Saudi Arabia each and every year just to make up for natural depletion. Any growth in demand would have to be satisfied by additional supply. The recent decline in oil prices is temporary and is giving astute investors an excellent opportunity to acquire cheap in the ground reserves. Another problem that is not addressed is that the recent price decline in oil has many companies canceling or postponing development of new oil fields. This in my opinion will only exacerbate the problem and force prices even higher when demand picks back up.

John Polomny
The Real Deal