For the first time since the price collapse, international drilling is finally picking up at a time when the blistering growth of U.S. shale is set to take a breather because of pipeline constraints.
OPEC officials warn that underinvestment may lead to a price spike, but major oil producers do not have a strategy to meet longer-term demand growth.
Circumstances in the oil markets are expected to change, perhaps dramatically, early next decade. While U.S. production is expected to grow by a massive 2.5 Mbd in 2018-19, increases will thereafter slow considerably.
Jet fuel demand growth appears guaranteed in coming decades with increased aviation travel and limited substitutes in this area.
Two major forecasters see a sharp penetration of EVs in the next couple of decades. Although the outlook for EVs and the transportation sector is improving quickly, oil demand is likely to continue to grow.
Digital technologies may lower oil and gas production costs by 10 to 20 percent. As a result, technically recoverable oil and gas reserves could climb by as much as 5 percent globally, with the largest gains from shale gas.
It’s Déjà Vu All Over Again: OPEC, Petroleum Investment, and the Threat to U.S. Consumers and Energy Security
Over the decades, a key to these extreme shortages and surpluses in the global oil market is OPEC’s role in structurally either undersupplying the market or mismanaging its investment function.
The car industry is moving forward with new EV models, governments have set aggressive targets, and consumers are becoming more comfortable with the new technology, bringing about ideal conditions for electric cars to continue to thrive, even with low oil prices.
Electricity and renewable investments fell modestly last year, but the lower price environment over the past three years has taken a particular toll on upstream oil and gas outlays.
Recent reforms scrapped the requirement that Petrobras own a 30 percent stake in all pre-salt oil fields, essentially opening the door to private international companies. As a result, Brazil's oil production is flourishing.