Low oil prices could lead to global fuel shortages in the future, the International Energy Agency warned.
The IEA said that while low prices are good for consumers, they could eventually “trigger energy-security concerns.”
The Paris-based watchdog is worried that if oil stays at around $50 per barrel until the end of the decade, the world will have to rely on a small number of Middle Eastern producers who would be able to sustain production even at such low prices. Most other producers would find prices that low unsustainable, and would be priced out of the market.
“Now is not the time to relax. Quite the opposite: A period of low oil prices is the moment to reinforce our capacity to deal with future energy security threats,” said Fatih Birol, IEA executive director.
Prices fell from above $100 per barrel in June 2014 to their lowest level in six and half years in August 2015, trading below $42 a barrel.
The low prices are squeezing U.S. shale and other high cost producers. Many have been forced to cut spending to cope with the new reality.
Reliance on Middle East oil exports could eventually escalate to levels last seen in the 1970s, the Paris-based IEA said in its World Energy Outlook.
The IEA, which monitors energy market trends for the world’s richest nations, said Asian countries would be hit hardest by the insecurity.
Lower oil prices could also hamper the world’s transition from fossil fuels to renewable energy, the report warned.
