Investments in the crude oil sector are estimated to decline further after dropping around 20% this year on the back of falling demand growth, according to a senior official at the International Energy Agency (IEA).
"If this comes true, this would be the first time in two decades we would see declining oil investment for two years consecutively. This may be an indication for future oil markets," Faith Birol, executive director, IEA said at the Singapore International Energy Week, reports Reuters.
The Paris-based energy watchdog has forecast global oil demand growth to fall to 1.2 million barrels per day in 2016, down from 1.8 million barrels per day this year, in its monthly oil market report earlier this month, according to AFP.
In 2016 lower oil prices and steep spending cuts are expected to reduce non-OPEC output by nearly 500,000 barrels per day, the report added. "There has already been more than 20% decline in oil investment in 2015 alone", Birol added.
The Organization of the Petroleum Exporting Countries (OPEC) has also estimated demand growth to fall to 1.25 million barrels per day, according to the Hellenic Shipping News.
It is believed that bulk of the decline in oil investments will come from Brazil and North America.
The glut will become more pronounced after lifting of the sanctions on Iran, adding about 6 lakh barrels per day, notwithstanding the persisting risks in the Middle East, Birol said.
The IEA said it did not see oil prices to rebound in the short term, citing "ample" oil supplies till mid-2016. The IEA is an oil-importers' group established in 1974 that forecasters for "opaque" energy markets.