|By Arabian Post Staff| A scenario of continued fall in oil prices, OPEC oil export revenue could fall by a quarter despite the higher output, according to International Energy Agency outlook for oil.
In the Low Oil Price Scenario, the Middle East’s share in the oil market ends up higher than at any time in the last forty years, it says.
According to IEA, lower prices are not all good news for consumers. The economic benefits are counterbalanced by increasing reliance on the Middle East for imported crude oil and the risk of a sharp rebound in price if investment dries up.
Concerns about gas supply security would also be heightened if prices stay too low to generate the necessary investment in supply.
The agency says lower oil prices alone do not have a large impact on the deployment of renewable energy technologies in the power sector, but only if policymakers remain steadfast in providing the necessary market rules, policies and subsidies.
In a Low Oil Price Scenario, longer payback periods mean that the world misses out on almost 15% of the energy savings seen in IEA central scenario, foregoing around $800 billion-worth of efficiency improvements in cars, trucks, aircraft and other end-use equipment, holding back the much-needed energy transition, it says.
IEA also believes oil price competition in Europe will intensify when Iranian crude returns to the market after sanctions on its nuclear program are lifted.
Europe will be the battleground between producers of sour crude grades, including Russia, Iraq, Saudi Arabia and Iran, as the Asian market becomes more “crowded,” IEA said.
Iraq, the second largest oil producer in the Organization of Petroleum Exporting Countries, has increased its market share in Europe after the imposition of sanctions on Tehran resulted in the collapse of Iranian exports, the IEA said. Iraq sold 1 million barrels a day to Europe in July and August, overtaking Saudi Arabia, according to the IEA.
Europe imports over 9 million barrels a day of crude from outside the region, with sour grades accounting for two-thirds of that, according to the IEA.