Crude oil price likely to rise gradually to $80 by 2020: IEA

London: Oil is unlikely to return to $80 a barrel before the end of the next decade, despite unprecedented declines in investment, as yearly demand growth struggles to top one million barrels per day, the International Energy Agency (IEC) said on Tuesday.

In its World Energy Outlook, the IEA said that it anticipates dem-and growth under its central scenario will rise annually by some 900,000 barrels per day to 2020, gradually reaching demand of 103.5 million bpd by 2040.

The drop in oil to around $50 a barrel this year has triggered steep cutbacks in production of US shale oil, one of the major contributors to the oversupply that has stripped 50 per cent off the price in the last 12 months.

“Our expectation is to see prices gradually rising to $80 around 2020,” Fatih Birol, the executive director of the IEA, said ahead of the release of the report. “We estimate this year investments in oil will decline more than 20 per cent. But, perhaps even more importantly, this decline will continue next year as well.”

“In the last 25 years, we have never seen two consecutive years where the investments are declining and this may well have implications for the oil market in the years to come.”

Oil companies have grappled with the downturn and a “lower for longer” price outlook by slashing spending, cutting thousands of jobs and delaying around $200 billion in mega-projects around the world.

The IEA, the trade body of oil consumer countries, estimates investment has already fallen by 20 per cent this year. Higher-cost producers in Canada and Brazil, as well as the United States are likely to fall victim to low oil prices faster than most exporters, but these declines could be offset by supply growth in Iraq and Iran.

Mr Birol said the Middle East, which provides about a third of the world’s oil, could see exp-orts equate to more than two thirds of total supply, particularly in a sustained environment of $50 oil prices.