The big wild card behind the oil boom headlines
The big wild card behind the oil boom headlines / Michael Levi, Energy, Security, and Climate, 14/11/2012
The International Energy Agency (IEA) made headlines around the world earlier this week when it published a major report predicting that the United States would pass Saudi Arabia to become the world’s largest oil producer by 2017. It is a striking conclusion that reinforces much of what industry analysts have been writing for the past several months.
But buried in the report is a major assumption that underpins its conclusions: the IEA analysts assume that OPEC producers will hold a substantial amount of oil off the market in order to prop up prices. A similar assumption, often implicit rather than explicitly stated, underlies many other optimistic analyses too…