The International Energy Agency (IEA) stated that Middle East producers’ delay in new oil production investments could lead to higher oil prices due to supply shortages. Although it forecasts the US to become the largest producer of oil worldwide by 2015, the IEA expects US production to decline after 2020. Some Middle Eastern nations have been holding off on new investments due to the increase in US and Canadian production. Saudi Arabia plans to keep its production capacity stable for the next 30 years. The United Arab Emirates has put off its plans to increase capacity until 2020. According to the IEA, by 2025, Middle Eastern oil demand will be the equivalent of China’s current use. The IEA also forecasts that, after 2020, the primary force in the growth of oil demand will be India, replacing China. Inexpensive natural gas in the US and the resulting relocation of energy-intensive industries to the US is expected to lower the EU and Japan’s energy-intensive exports by a third.

Source: Financial Times