For many energy market watchers, including ourselves, recent months have left us confounded.
With all the economic and geo-political fundamentals currently in play pointing to increased energy prices, precisely the opposite has happened.
Indeed anyone predicting consistent price falls whilst also recognising the pressures on the global energy market would have been pilloried before recent events matured.
Now though the International Energy Agency (IEA) in their latest World Energy Outlook has cautioned that rather than the fundamentals being wrong they are simply disguised by the on-going US shale gas boom and its impact on the market dynamic.
Indeed the report estimates that energy demand will rise by 37% by 2040 and while they confidently predict that there are sufficient global resources available to meet that demand there is significantly less confidence in the necessary political action and investment needed to realise it.
The report explained:
“The short-term picture of a well-supplied oil market should not disguise the challenges that lie ahead as reliance grows on a relatively small number of producers.
“The situation in the Middle East is a major concern, given steadily increasing reliance on this region for oil production growth, especially for Asian countries that are set to import two out of every three barrels of crude traded internationally by 2040.”
The IEA’s chief economist, Fatih Birol, said:
“The apparent breathing space provided by rising output in the Americas over the next decade provides little reassurance, given the long lead times of new upstream projects.”
While the future of energy supplies is still unclear, one thing is for certain, it needs political co-operation and a global mindset to deliver a solution.