Saudi Arabia and its key Gulf allies have no intention of backing down on their ‘market share over price’ policy until global markets rebalance. The International Energy Agency’s (IEA’s) latest forecasts indicate that this may take some time.

The IEA’s eagerly-anticipated 2015 World Energy Outlook, released 10 November, casts US shale output as the new swing producer. The IEA projects that an oil price of close to $70/B is needed to see US shale output rise above 2015 levels by 2020 (see graph). Given that global oil demand also continues to grow in the meantime (the IEA puts 2020 demand at 95.9mn b/d, up 5.3mn b/d on 2014) it will take an oil price of $80/B by 2020 to incentivize sufficient shale output to balance the market. (CONTINUED - 1684 WORDS)