"Historic" Amount of Cancelled Investments Will Cause Oil Price Spikes in the "Not-Too-Distant" Future: IEA

IEA says $300-billion in spending is required "just to stand still."

With an "historic" $100 billion-plus of investments cancelled by producers due to low oil prices, the International Energy Agency (IEA) worries that prices will spike in the "not-too-distant" future as supply fails to meet demand, media reports.

Speaking at the Singapore International Energy Week 2016 conference, Neil Atkinson, head of the IEA's oil industry and markets division, told delegates that about $300 billion in cumulative investment is required for the production sector "just to stand still" and that the U.S., Canada, Brazil, and Mexico are having difficulty maintaining spending.

Atkinson added that the industry is barely investing upstream and that if spending "doesn't resume in 2017 and 2018, we can see a spike in oil prices."

Atkinson's urgency is informed by his calculations that the oil market will be balanced next year and stockpiles will fall from 2018 to 2021.

He also predicts that global demand will grow 1.2 percent per year to 2021, compared with the 1.7 percent annual growth between 2009 and 2015.

In a separate interview at the SIEW event, Atkinson reiterated that "You need to invest large sums of money just to maintain existing production and if you want to grow production to meet the demand growth that we're expecting, that money has to come from somewhere and we're seeing big cuts."

He was referring to companies such as ConocoPhillips, Chevron Corp., and BP Plc, which began cancelling investments and selling assets as oil sank towards and ultimately dipped below $30 per barrel in January.

He capped his argument by pointing out that there is little spare capacity globally apart from Saudi Arabia and a few Gulf nation states, and that supply disruptions due to political instability are a distinct possibility for nations such as Nigeria, Iraq, Venezuela, and Libya.

Atkinson's comments fall in line with his Agency's Medium-Term Oil Market Report predictions that the global market will begin to rebalance next year and that oil exploration and production capital expenditures will fall 17 percent this year, on the heels of a 24 percent cut in 2015.