IEA: Oil prices up to $80 by 2020 and low-cost fossil fuels to hit pollution reduction
A report by the International Energy Agency (IEA) sees a slow recovery for oil to $80 a barrel by 2020 and OPEC's share of worldwide production expanding as its strategy of maintaining output whilst prices are low impacts on rival suppliers, such as US shale oil.  By 2040, OPEC could account for almost half of global oil production; this over-reliance on a small number of producers would trigger concerns about the security of energy supply, primarily in Asia, said IEA.  The report also predicts that natural gas use in China and the Middle East will  overtake  European consumption by 2025 and believes low-cost fossil fuels will, in fact, risk undermining efforts to reduce pollution as green technology will struggle to compete against this cheaper alternative.  

Oil prices are set for a slow recovery, according to the latest report from International Energy Agency (IEA), which cautioned against the deep investment cutbacks in the industry.

In its latest World Energy Outlook, the IEA's central scenario for oil prices forecast that the oil market would rebalance at $80 a barrel (bbl) in 2020, "with further increases in price thereafter."

The IEA forecast that demand would pick up slowly to 2020, adding an average of 900, 000 barrels a day per year, gradually rising to a demand for 103.5 million barrels per day by in 2040. That compares with 94.5 million barrels per day in 2015.

It said this subsequent rise after 2020 would, however, be "moderated by higher prices, efforts to phase out subsidies (provided that momentum behind reform is maintained, even as oil prices pick up), efficiency policies and switching to alternative fuels."

IEA Executive Director Fatih Birol told CNBC the organization did not think a world in which the price of oil was stuck at $50 for "many many years" was a likely scenario.

Birol added that Iraq production growth would slow down due to geopolitical turmoil, while growth in Brazil, Canada and Russia would also not be as strong as before.

The IEA forecast that collectively, the U.S., European Union and Japan would see their oil demand drop by around 10 million barrels a day by 2040.

"In terms of exporting...the Middle East will remain crucial," Birol said. Iran could make a significant contribution to oil production once sanctions are lifted, but to see a major expansion the country needed to invest significantly.