IEA Shows How to lose credibility in two simple steps

Paris climate agreement

Latest Oil Market Report :

[Editor’s Note: Irina Slav is a very knowledgeable energy writer who will be contributing content to Shale Magazine in the future. She also writes a terrific blog at that is updated several times with new content each week. Her October 19 piece detailing the contradictions and inconsistencies contained in two recent reports from the International Energy Agency is important, and something everyone should read and absorb. It is excerpted below.]

In its latest Oil Market Report,

the International Energy Agency warned that OPEC’s spare production capacity is dwindling. It said this spare capacity could shrink from some 9 million bpd to less than 4 million bpd next year. It also said this meant more investments in new oil production were necessary.

On the face of it, the warning makes perfect sense but only if this face is all you’ve ever seen. Because put into the context of previous reports by the International Energy Agency, this warning is more than just an unnecessary justification for the existence of the agency. It raises a big question about the IEA credibility as a reputable source of information on energy markets and future trends in demand and supply.

According to its own website, the International Energy Agency was set up in response to the 1973 oil crisis as a mechanism to ensure oil supply security for its members. During the years, the IEA transformed into a policy advisory body for a growing number of members and one of the most closely followed enеrgy market forecasters in the world.

This is what the IEA said in its October Oil Market Report:

With OPEC+ currently on track to pump 700 kb/d below the call for its crude during 4Q21, inventories will continue to decline. As the bloc ramps up production, its spare capacity will dwindle. Compared with a cushion of 9 mb/d in 1Q21, effective spare capacity could fall below 4 mb/d by 2Q22 and be concentrated in only a few Middle Eastern countries, although supply is expected to exceed demand. Shrinking global spare capacity underscores the need for increased investments to meet demand further down the road.

And this is what the same agency said in May its inaugural Net Zero by 2050 Roadmap:

Beyond projects already committed as of 2021, there are no new oil and gas fields approved for development in our pathway, and no new coal mines or mine extensions are required. The unwavering policy focus on climate change in the net zero pathway results in a sharp decline in fossil fuel demand, meaning that the focus for oil and gas producers switches entirely to output – and emissions reductions – from the operation of existing assets. Unabated coal demand declines by 98% to just less than 1% of total energy use in 2050. Gas demand declines by 55% to 1 750 billion cubic metres and oil declines by 75% to 24 million barrels per day (mb/d), from around 90 mb/d in 2020.


In May this year, the IEA forecast that under its net-zero scenario, oil demand destruction will be so substantial there was no need for new investments as of 2021. Five months later, the same agency called on OPEC to invest in more oil production capacity because demand was, apparently, not going anywhere this fast.

Of course, it must be noted that the net-zero roadmap is not the same sort of a forecast as the monthly oil report. It is more of a best-case scenario developed by the IEA, which begins by slamming governments for falling short in their net-zero commitments of what actually needs to be done to have a net-zero human civilisation in 2050.

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