The Paris-based International Energy Agency (IEA) released a report on Tuesday indicating the global energy market will continue to have a tough year.
The note explained the industry would continue to put unwanted oil in storage in order to cope with declines in U.S. output, reports Fortune. The IEA also expects that the Organization of the Petroleum Exporting Countries (OPEC) won’t cut a deal with producers to help handle the rise in output.
IEA doesn’t imagine the price per barrel will reach $10, but acknowledges it was difficult to see how a significant rise could occur from current levels. Forecasts for demand growth were lowered to 1.17 million barrels per day (bpd) after it reached a five-year-high of 1.6 million bpd in 2015, adds Reuters.
A deluge of events has placed the oil industry in a precarious position. The prolonged collapse in prices has rendered numerous oil fields unprofitable risking an estimated 150 oil and gas companies declaring bankruptcy, writes The New York Times. Iran’s ability to pump oil post-sanctions, and Saudi Arabia’s continued production despite growing economic uncertainties, coupled with a strong U.S. dollar signifies the glut will worsen in 2016, according to IEA.
You can read the rest of the agency’s report here.
