According to Fatih Birol, chief economist at the International Energy Agency, the world could be looking at much higher oil (NYSE:USO) prices due to inadequate investment in oil and energy (NYSE:XLE) related infrastructure — particularly in the turmoil-affected regions of the Middle-East and North Africa.
Though a more accurate estimate of the shortfall in investment will be released later by the IEA, Birol claimed about $1.5 trillion needs to be invested every year to meet world demand going forward to 2035. Though a lot of the money is coming to the table, unfortunately there is a disturbing shortfall in the Middle East and North Africa, the main supply sources.
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According to Birol, “if we don’t find that money, then the production won’t grow as much as it needs to grow, and as a result of that, one can see much higher prices than we have now today.”
The IEA, created in the wake of the 1970s oil (NYSE:OIL) crisis, is made up of more than two dozen mainly European, oil-importing countries. It works to coordinate responses to supply disruptions and gather research and data on the energy sector (NYSE:XLE).