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ONS 2014: A volatile world causes uneasy balance between supply and demand - IEA

26th August 2014

The disruption to supply cause by unrest in the Middle East and the emergence of unconventional oil and gas has created an uneasy balance in supply and demand, according to Maria van der Hoeven, executive director of the International Energy Agency (IEA)

ONS 2014: A volatile world causes uneasy balance between supply and demand
'There is a balance between supply and demand and that is underlined because although there is this turmoil in the Middle East up until now not one barrel less of oil has come to the market, so supplies are okay' - van der Hoevan

“What we can see is that at the moment there is quite a lot of turmoil in parts of the Middle East, especially in Iraq,” she explained. “This is concerning because when you look at future supply, OPEC relies on Iraq because that is the main new supplier that may come to the market.

“On the other hand we can see a lot of non-OPEC supply coming to the market, especially from the United States, Canada and other non-OPEC parts of the world. There is a balance between supply and demand and that is underlined because although there is this turmoil in the Middle East up until now not one barrel less of oil has come to the market, so supplies are okay. What happens in the future you cannot tell.”

But the question remains as to how reliable and secure supply of unconventional oil and gas is?

“The point is that when you look into the position in the United States it is extremely favourable,” van der Hoeven added. “There is good geology, there is a favourable policy framework and there is a very mature and well established oil and gas industry. These are three critical conditions to have something like the US shale boom. But it is very difficult to copy and paste this to other parts of the world. The other concern is how sustainable it is because it requires a lot of wells to be drilled.

“It is important that technology moves on so that you can get more of it. Technology and research and development in the United States are not at a standstill, it moves on and that is important for the world to realise. My third point is there is a lot of unconventionals that are not always easy to exploit.”

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