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Energy group the IEA has forecast a sharp drop in the growth of demand oil in 2015, according to news agency Reuters.
The IEA now expects global demand to reach 93.5 million bpd, an increase of 1.1mbpd. This projected increase is down by 300,000bpd from the EIA’s previous 2015 projections.
The price of oil has tumbled in recent months from a high point of $115 per barrel in June to around $88 per barrel today. The drop in pricing is widely attributed to the boom in US shale oil production.
The IEA said demand would be supported by prices near four year lows – oil is around $88 a barrel from above $115 in June, a 25 percent drop resulting from a boom in U.S. shale oil production, slow global growth and a strong dollar.
In a rare IEA comment on OPEC’s strategy, its chief analyst Antoine Halff said the producer group may no longer be willing or able to adjust production as the market has been transformed by the U.S. shale oil revolution.
“We should not expect OPEC to necessarily play its traditional role of swing producer,” Halff told Reuters on Tuesday, adding that other players with higher production costs might cut instead, such as those extracting from deepwater or oil sands.
