Oil demand unlikely to peak anytime soon - IEA’s Birol

International Energy Agency (IEA) executive director, Faith Birol, speaking on the side-lines of the GE Oil and Gas annual meeting in Florence said that he does not foresee oil demand peaking soon due to rising consumption in developing economies.

on the sidelines of the 47th World Economic Forum in Davos, Switzerland earlier this month, Birol said that he expects crude oil prices to be volatile in 2017. "We see U.S. oil production increasing and bringing a lot of oil in the market in the next few months, which will again put downward pressure on prices." Birol said.

U.S. shale oil is making a comeback. Oil prices have doubled from $28 per barrel last year to around $55, prompting U.S. shale oil producers to increase output. Donald Trump’s opposition to the Iran deal is another threat to crude oil production. Political stability is needed for investments to be made in Iran and Iran needs to be at good terms with the international community. Birol also sees better prospects for the renewable energy industry amid the volatility surrounding oil prices.

"We do not see in the near and medium terms oil products can be substituted by other fuels. More than one third of growth comes from trucks in developing Asia... We do not subscribe to oil demand peaking anytime soon,” said Birol. "If there are no major new major projects this year, it will be very difficult to see how we do not have turbulent times in the market in the years to come because of the growing supply gap."