The supply glut of crude oil is set to extend into 2017 due to the resilience of non-Opec production, according to the IEA’s 2016 Medium Term Oil Market Report (MTOMR), released 22 February. But with global production capacity growth slowing over the report’s 2015-21 timeframe due to international oil companies (IOC) and national oil companies (NOC) alike cutting investment, the IEA warns of the risk of a price spike.

But, while non-Opec production is projected to fall in 2016, the IEA expects it to bounce back strongly and be the primary driver of growth to 2021. Indeed, Opec growth is projected to be relatively flat and located solely in the Gulf, leading to a steep drop in the group’s spare capacity and further evidence of the development of a two-tier Opec. (CONTINUED - 2273 WORDS)