If investment flows continue at their current rate, there could actually be a shortage of oil supply by 2020, Saudi Arabian Energy Minister Khalid al-Falih said recently. This would mark a stark contrast to the current state of the global oil market, which is still highly oversupplied and keeping prices down (though rising since international output deals were announced late last year).

“I believe if the investment flows that we have seen the last two or three years continue in the next two or three years, we will have a shortage of oil supply by 2020,” al-Falih told CNBC in an interview. “We know, from what we have seen in the last couple of years, that prices around the current level and below are not attracting enough investment. We know the level of decline, natural decline, that existing production is undergoing, and we know that demand is picking up at…1.2 to 1.5 million barrels a year.”

Al-Falih’s conclusion?

“So between an increase in demand and natural decline, we need millions of barrels every year to be brought to the market, which requires massive investment,” he said, adding that $100/bbl oil again is highly unlikely, and that prices haven’t yet reached their right “equilibrium.”

About The Author Jeff Reed

I specialize in analysis of the oil and gas sector- with emphasis on the Middle East, OPEC, and the politics of energy. I hold a BA in Political Science and MA in Theological Studies from the University of St. Thomas. Prior to a career in oil and gas journalism, I was a Roman Catholic priest serving churches in the Houston area. I also taught high school for a year in Oakland, California, and worked for two years in retail management. Among my other areas of interest are political philosophy, religion and society, culture and the arts, and philosophy.