Consumers should brace for a 50 percent jump in oil prices in the near future as global oil supply will increasingly have trouble keeping pace with demand, forecasts a new energy report from CIBC World Markets.
The report predicts that surging demand in developing economies, combined with accelerated depletion of existing supply and widespread delays in getting new oil fields up and running, will see the global supply of oil fall as much as 8 million barrels a day below International Energy Agency estimates by 2012.
"Those projections ignore two fundamental forces that have, in recent years, brought global production to a virtual standstill," said Jeff Rubin, chief strategist and chief economist at CIBC World Markets. "The first is depletion. You have to run faster to stand still. Depletion from existing fields has accelerated to over four per cent, a rate that currently cuts nearly four million barrels per day out of each year's production."The second fundamental force blowing up supply forecasts is the huge project delays and massive cost overruns associated with many of the world's largest new oil mega-projects. From Kazakhstan to Nigeria's Delta region, protracted delays in some of the world's largest energy mega-projects will have huge impacts on actual supply growth over the next five years.">>>MORE
