Davos 2019: U.S. To Create Balance In Crude Oil Market, Says IEA’s Fatih Birol
Crude oil prices will continue to remain volatile in 2019 even as the U.S. looks to increase shale oil production and beef up its pipeline capacity, International Energy Agency’s Executive Director Fatih Birol said.
Oil prices had skyrocketed to $86 per barrel last year, forcing the U.S. shale oil companies to ramp up their production and increase output. This year, too, Birol expects the U.S. to expand its production capabilities to “comfort” the market amid high price volatility.
“I do expect a volatile market,” Birol said, adding that if there are no major geopolitical tensions, he doesn’t see very high oil prices this year.
$60/barrel seems to be the floor price for oil.Fatih Birol, Executive Director, International Energy Agency
“As of 2019, there will be a huge amount of new pipeline capacity coming, so the U.S. will be able to react to the international price developments in much faster and much bolder terms,” Birol told BloombergQuint on the sidelines of the 49th World Economic Forum in Davos, Switzerland.
While warning the traditional oil producers to be careful of the increased foothold of the U.S. in the energy sector this year, Birol said that the U.S. beefing up its oil production capacity should be good news for the entire world, especially importing countries like India and China, as there will be more than a few suppliers in the sector. “They don’t need to put all eggs in the same basket.” Birol, however, said that the Middle East, especially Saudi Arabia, would remain the most important exporting region even 10 years from now.
He also spoke about the world’s move towards sustainable energy but noted that it’s too early and an “over-simplification” of the matter to believe that the era of oil and gas is over. “There is still a huge growth potential. We are only seeing beginning of the movie, there is more to come.”
Watch the full conversation here: