Lower Oil Prices Cause Investment To Drop By $300 Billion; a Significant 2017 Rebound "Appears Unlikely", Says IEA

IEA says that the Middle East now accounts for 35 percent of global oil supplies.

It's been analyzed laboriously, fretted over, and reported on extensively, but now it's official: the current oil price environment has negatively impacted oil investments, hurt energy efficiency, and boosted the share of oil produced in the Middle East, according to the International Energy Agency (IEA).

Following up on its World Energy Outlook 2015, which examined the potential impact of a prolonged period of lower oil prices on energy markets, the IEA this week released an updated analysis showing that oil sector investments declined in 2015 and again in 2016 - the first consecutive two-year drop in three decades.

The Agency states, "The industry cut more than $300 billion in spending in two years, or 42 percent of the total, an unprecedented downturn, even taking into account significant reduction in costs.

"North America accounted for about half the drop; if prices remain at current levels, a significant rebound appears unlikely in 2017."

Not surprisingly, the IEA found that the Middle East producers are the big winners of the current price environment, with their oil supply having reached historically high levels of over 31 million barrels per day: "The region now accounts for 35 percent of global oil supplies, the highest level since 1975."

In February, the IEA predicted that global oil exploration and production capital expenditures will fall 17 percent this year, on the heels of a 24 percent cut in 2015; it also stated that an oil price rally will be limited in the near term due to resources "that can be easily and quickly tapped", and that an oil price spike in the later part of the forecast period could occur.