The world supply, or surplus, of oil will peak this year after the economic crisis and low prices in the first quarter slashed much-needed investment, says a senior executive at Australian investment bank Macquarie.
"This is our view--capacity has pretty much peaked in the sense that declines equal new resources," Iain Reid, head of European oil and gas research at Macquarie, said in an interview.
The peak oil theory that oil supply is at or near its peak was long considered marginal. It gained currency when prices zoomed toward their record of nearly$150 US in July 2008, with leading exponents suggesting various dates for the supply peak to be reached.
Some oil majors have acknowledged the prospect of dwindling production, but others have argued that better extraction techniques and other technological advances will offset any decline.
Reid's latest research report -- titled The Big Oil Picture:We're not running out, but that doesn't mean we'll have enough--sees global oil production capacity topping out at 89.6 million barrels per day (bpd) this year, a far more pessimistic view than most other banks or traditional forecasters.
Underinvestment in mature fields, rising resource nationalism, and the cost and difficulty of retrieving oil from discoveries in ultra-deep water could see global production capacity fall to 87.3 million bpd by 2015, according to Reid.
Reid, who spent 16 years with oil firms Shell and Amerada Hess, saw the current spare-capacity cushion of around 5.2 million barrels wiped out by 2012.
"With the reduction in spending on mature fields, that's the major driver. Then really it's about,'Where do the new sources come from?' " Reid said, adding the economic crisis had further restricted investment.
"If you look around the world, it's either locked up in countries which are difficult to access, or it's locked up in countries where they are tightening access, or it's in these huge mega-structures which are very difficult to develop technically and cost-wise."
The International Energy Agency, adviser to 28 industrialized nations, has predicted global supply will continue to rise through 2015, but that demand might grow faster than that.
Macquarie saw the potential for a huge supply deficit to emerge, with global oil demand predicted to rise to 90.9 million bpd by 2015 from 84.2 million bpd today because of rising consumption from China and other emerging markets.
"Adding sufficient productive capacity on time is nearly impossible," Reid said in his report.
Episodes of higher oil prices would be an obvious consequence, without either a greater political push for efficiency savings or new technological advances, he said.
But his price forecasts were still relatively conservative. He expected the benchmark U.S. crude contract will average $84 a barrel in 2012, compared with about $71 now. The bank's "long-run" forecast is for an average price of $75.
