The current oil price has had a negative impact on oil investments but has boosted the share of oil produced in the Middle East according to analysis from the International Energy Agency.
Data highlights that investments in the oil sector drop in 2015 and further declined in 2016 – the first consecutive two-year drop in 30 years. Overall, the industry cut more than $300 billion in spending in two years, or 42% of the total, which the IEA says is an unprecedented downturn.
North America accounted for half the drop. If prices remain at current levels, a significant rebound appears unlikely in 2017.
Additionally, the latest data also reveals that Middle East oil supply has reached historically high levels, exceeding 31 million barrels per day. The region now accounts 35% of global oil supplies, the highest level since 1975.
The IEA says: ‘This growth in production, from Saudi Arabia, Iraq and Iran, highlights the fact that low-cost producers in the Middle East remain central to oil markets. Production from the Middle East is expected to account for most of the world’s demand growth this year.’
The lower fuel prices are also impacting energy efficiency trends in some countries, particularly in the transportation sector. For example, in the US, sales of SUVs grew at a rate around 2.5 times faster than sales of light duty vehicles between 2014 and 2015. Sales of SUVs in China grew at an even faster rate.