IEA warns of "oil crunch" by 2030

The International Energy Agency (IEA) has today warned that shrinking oil supplies mean the world must look to new low-carbon technologies to provide its energy as a matter of the utmost urgency.

The report represents the first time the watchdog has formally expressed fears that a global "oil crunch", whereby demand exceeds supply, could become a reality, claiming that "there remains a real risk that under-investment will cause an oil-supply crunch in that timeframe [now-2030]."

The agency claims there is enough oil to support rising demand for 40 years, but warns that maintaining a stable supply will require increasingly high levels of investment from producers.

It claims that premium oil sites are quickly running out, and secondary sites, such as oil sands, are both more expensive to operate and concentrated in the hands of a small group of countries.

Meanwhile, it expects growing oil consumption among emerging economies to add 50 per cent to current demand levels, and warns that the likelihood that these countries will strike long term deals with Opec will only add to the risk of a supply crunch.

The report also predicts that oil cartel Opec will control 51 per cent of output by 2030 with oil prices reaching around $200 a barrel.

Nobuo Tanaka, executive director at the IEA, said that the report highlighted the urgent need for governments to develop alternative means of energy.

"Current trends in energy supply and consumption are patently unsustainable – environmentally, economically and socially – they can and must be altered," he said, adding that the market was becoming increasingly susceptible to "supply disruptions and sharp price hikes".

He added that projected oil demand would also put the world on track for an eventual global temperature increase of up to six degrees and urged governments to step up efforts to develop low carbon economies.

"We cannot let the financial and economic crisis delay the policy action that is urgently needed to ensure secure energy supplies and to curtail rising emissions of greenhouse gases," he said. "We must usher in a global energy revolution by improving energy efficiency and increasing the deployment of low-carbon energy."