Don't write oil's 'obituary,' IEA says in long-term demand forecast

Global oil demand is expected to keep rising over the next two decades, albeit at a steadily decreasing pace, according to a new report from the International Energy Agency.

U.S. projected to become net oil exporter thanks to gains from shale oil output

An oil pump owned by Parsley Energy Inc. operates near Midland, Texas, in this May 2017 photo. (Ernest Scheyder/Reuters)

Global oil demand is expected to keep rising over the next two decades, albeit at a steadily decreasing pace,      according to a new report released Tuesday by the International Energy Agency.

"It is far too early to write the obituary of oil, as growth for trucks, aviation, petrochemicals, shipping and aviation keep pushing demand higher," said Fatih Birol, executive director of the Paris-based IEA.

Overall global energy needs are seen rising more slowly than in the past, but are still projected to expand by 30 per cent between today and 2040. 

"This is the equivalent of adding another China and India to today's global demand," the IEA said in its report.

Net exporter

With big gains forecast in its output of shale oil, the United States is expected to become a net oil exporter by the mid-2020s, the IEA said, adding that the U.S. will account for 80 per cent of the increase in the global oil supply to 2025, which will maintain near-term downward pressure on prices.

Crude has climbed lately to a two-year high around $57 US a barrel in trading in New York, although it is not seen making much larger gains due to rising U.S. output.

Along with the expected demand for oil, the IEA said natural gas use is projected to increase by 45 per cent to 2040.

The agency also pointed to the future development of renewable energy sources, saying that they are expected to capture two-thirds of global investment in power plants through to 2040 as they become the lowest-cost source of new power generation in many countries.

'Absurdly pessimistic'

Climate activists said the IEA report is too negative, but added that it highlights the need for more action to combat climate change.

Greenpeace energy analyst Lauri Myllyvirta said the report is "absurdly pessimistic about renewables," adding that similar forecasts have proven wrong in the past.

Myllyvirta said international targets to curb global warming and reduce deaths from air pollution nevertheless require a greater commitment to renewable energy sources.

Reducing the use of fossil fuels is a key demand from activists and many governments taking part in the global climate talks in Bonn, Germany, this week.

with files from The Associated Press