IEA cuts oil demand forecast

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But the oil market isn't tightening as quickly as once anticipated, the IEA said in its monthly oil-market report.

The predictions come from the International Energy Agency's annual energy forecast. That means that, despite the rapid deployment of wind and solar power worldwide, global Carbon dioxide emissions will continue to rise until 2040, "far from enough to avoid the severe impacts of climate change", the IEA said.

"A remarkable ability to unlock new resources cost-effectively pushes combined United States oil and gas output to a level 50% higher than any other country has ever managed", the IEA said on Tuesday. "Meeting this demand would require an overall investment of around $10.5 trillion across upstream, midstream and downstream operations" Opec Secretary-General, Mohammad Barkindo, said noting that the 2017 outlook was more positive than a year ago, partly thanks to oil exporting nations' efforts to stabilise the market.

Yet that could still change, the IEA said.

"Yet this is precisely what is happening as a result of the USA shale revolution - both for oil and for natural gas", the IEA said.

Nevertheless, U.S. shale output is expected to decline from the middle of the next decade, and with investment cuts taking their toll on other new supplies, the world will become increasingly reliant once again on OPEC, according to the report.

"Even after some modest reductions to growth, non-OPEC production will follow this year's 700,000-bpd growth with 1.4 million bpd of additional production in 2018 and next year's demand growth will struggle to match this", the IEA said.

A study by Bank of America Merrill Lynch forecasts that pure electric vehicles would achieve a global penetration of 12 per cent in 2025, 34 per cent by 2030 and 90 per cent by 2050.

Lower prices are helping to support oil demand, and the IEA raised its projections for global consumption through to 2035, despite the growing popularity of electric vehicles.

It expects the U.S. to account for 80% of the increase in global oil supply to 2025, driven by increases in shale.

Chris Watling, CEO and chief market strategist at Longview Economics, was quoted as saying that the adoption of EVs could lead to global peak oil demand as soon as 2023, which will result in oil prices crashing to $10.

"Solar is forging ahead in global power markets as it becomes the cheapest source of electricity generation in many places", said Fatih Birol, executive director of the IEA.

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