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While the IEA’s modeling suggests a rebound in oil prices to $80/B by 2020, the agency’s executive director Fatih Birol speculates as to the likely effects of an extended period of lower prices.
“If oil prices remain at about $50/B, light tight oil in the US will decline by about 2.5 mn b/d by 2020…If $40/B [by] around 3 mn b/d,” he says, adding that “in order to get profitable projects in the US, you need prices between $60-70/B.”
While the IEA views a “$50/B world” as “rather unlikely” this could come about if the “resilience” of US shale output vis-a-vis prices were “stronger than shown [so far]” while “stable production from the Mideast, such as Iraq, and others gives a boost to supply.”
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