Oil Prices Fall after IEA’s Call to End Fossil Fuel Exploration
Oil prices fall on Wednesday after the United States International Energy Agency calls for no fossil fuel exploration as a path to achieving a net-zero emission plan.
“The world doesn’t need any new investments in oil and gas beyond what is already approved if it hopes to achieve net-zero emissions by 2050”, the International Energy Agency (IEA) said on Tuesday.
Adding to pressure in the oil market is fear arising from the slow pace of economic and global oil demand recovery in many Asian countries, primarily India.
Following the new covid-19 wave, India’s demand takes 500,000 barrels per day hit in May as caseloads increase. Today, the international benchmark Brent crude traded at $67.98 per barrel after falling by 1.07% from $68.71 a barrel.
American benchmark West Texas Intermediate (WTI) was at $64.67 per barrel at the same time for a 1.2% fall after it ended the previous session at $65.49 a barrel.
Global oil prices were up supported by strong demand recovery signs after lockdowns eased in some European countries, including the UK and Portugal, while many US states lifted restrictions allowing businesses to reopen.
Restrictions are relaxing and life is returning to normal in major economies progress signals an economic recovery and in global oil demand from damages wrought by the pandemic.
However, India’s daily coronavirus cases dropped below 300,000, the Health Ministry data showed. According to the ministry, 4,329 deaths and 263,533 new cases were recorded in the last 24 hours, taking the total cases to 25.23 million.
This week, the IEA suggested that there should be no new oil and gas investments after 2021.
Reacting, oil prices took a breather Tuesday morning, but Brent is once again tested $70 per barrel, with expectations of improved demand on the heels of widespread vaccinations in the U.S.
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IEA suggests there should be no new fossil fuel exploration after 2021 in order to achieve a net-zero emissions plan. The report calls to end fossil fuel exploration. “No exploration for new resources is required,” the agency said.
It also listed a series of restrictive policies that are necessary, including phasing out sales of the internal combustion engine and bans on new natural gas hookups in buildings.
Meanwhile, the steep cuts to capital expenditure and the increasingly stringent climate policy have forced the oil majors to lower their growth plans. Some analysts warn that this could set the market up for a supply crunch in the coming years.
India’s oil demand could be off by as much as 500,000 bpd for the month of May, according to Reuters. The negative effects from the Covid-19 spike are expected to extend into June.
Oil Prices Fall after IEA’s Call to End Fossil Fuel Exploration
