Russia on Monday warned of a strong risk of global overproduction of oil that could lead crude prices to drop below $40 a barrel.

"There are really great risks of overproduction today," Russian Energy Minister Alexander Novak said during a meeting with Saudi counterpart Khalid al-Falih in Moscow.

"We have to analyse everything... in order to take a balanced decision in July," he said, referring to a key meeting of the so-called OPEC+ alliance between OPEC members and other oil-producing countries including Russia.

The alliance is set to meet in Vienna at the beginning of July according to the Saudi minister, to decide whether to extend an agreement on production levels.

Russia has agreed with OPEC member countries on cutting production of crude to build up prices after the crash of 2014-15.&nbsp;

The 25-member alliance agreed to cut output by 1.2 million barrels per day from the start of this year after oil prices dipped by more than 30 per cent late last year.

"Prices can drop below $40 and even down to $30 a barrel," Russian Finance Minister Anton Siluanov told lawmakers on Monday, quoted by Russian agencies.

Novak also said that such a scenario "cannot be ruled out".

"A lot depends on the situation on the market in the second and third quarter, from the balance of supply and demand, and how the situation develops with uncertainties, trade wars, and sanctions pressures on several countries," he said.

"We are working to take preventative steps to avoid the scenario that was discussed," Falih said regarding the prospects of prices falling to $30 a barrel, in translated comments.

Massive drops in exports by Iran and <a href="https://www.wionews.com/business-economy/venezuelas-oil-exports-drop-17-in-may-as-sanctions-kick-in-report-224373">Venezuela</a> plus the agreed output cuts implemented by the OPEC+ group since January have cut supplies.

US President Donald Trump has urged OPEC to boost oil production in order to tamp down rising prices.

Russia on Monday warned of a strong risk of global overproduction of oil that could lead crude prices to drop below $40 a barrel. "There are really great risks of overproduction today," Russian Energy Minister Alexander Novak said during a meeting with Saudi counterpart Khalid al-Falih in Moscow.

Russia on Monday warned of a strong risk of global overproduction of oil that could lead crude prices to drop below $40 a barrel. "There are really great risks of overproduction today," Russian Energy Minister Alexander Novak said during a meeting with Saudi counterpart Khalid al-Falih in Moscow. "We have to analyse everything... in order to take a balanced decision in July," he said, referring to a key meeting of the so-called OPEC+ alliance between OPEC members and other oil-producing countries including Russia. The alliance is set to meet in Vienna at the beginning of July according to the Saudi minister, to decide whether to extend an agreement on production levels. Russia has agreed with OPEC member countries on cutting production of crude to build up prices after the crash of 2014-15. The 25-member alliance agreed to cut output by 1.2 million barrels per day from the start of this year after oil prices dipped by more than 30 per cent late last year. "Prices can drop below $40 and even down to $30 a barrel," Russian Finance Minister Anton Siluanov told lawmakers on Monday, quoted by Russian agencies. Novak also said that such a scenario "cannot be ruled out". "A lot depends on the situation on the market in the second and third quarter, from the balance of supply and demand, and how the situation develops with uncertainties, trade wars, and sanctions pressures on several countries," he said. "We are working to take preventative steps to avoid the scenario that was discussed," Falih said regarding the prospects of prices falling to $30 a barrel, in translated comments. Massive drops in exports by Iran and Venezuela plus the agreed output cuts implemented by the OPEC+ group since January have cut supplies. US President Donald Trump has urged OPEC to boost oil production in order to tamp down rising prices.

Russia warns of 'great risk' of oil overproduction

Wall Street rose on Friday as investors hoped for progress on trade in a critical US-China meeting over the weekend, and the S&amp;P 500 and the Nasdaq posted their biggest weekly percentage gains in nearly seven years.

The Dow saw its largest weekly advance in two years. Investors were encouraged this week by comments by Federal Reserve Chair Jerome Powell and subsequent minutes from the central bank's latest meeting that suggested that the Fed will take a data-driven rather than ideological approach to future rate hikes.

All three major US&nbsp;indexes recorded modest monthly percentage gains for November.

A Chinese official said "consensus is steadily increasing" in trade negotiations between the US and China as the G20 meeting got underway in Buenos Aires, sparking hopes there would be a positive resolution in the ongoing tariff dispute between the world's two largest economies.

US President Donald Trump is set to meet with his Chinese counterpart Xi Jinping on Saturday and the outcome could swing stocks for the rest of the year.

"The three key issues that people are really focusing on are how dovish is the Fed going to be going forward, how are trade relations with China going to play out, and what's going on in the oil markets," said Charlie Ripley, senior market strategist for Allianz Investment Management in Minneapolis.

"But as we get better news, that's helped lift the markets," Ripley added. "That's why we're seeing a week like this week."

The Dow Jones Industrial Average.DJI&nbsp;rose 199.62 points, or 0.79 per cent, to 25,538.46, the S&amp;P 500 SPX&nbsp;gained 22.4 points, or 0.82 per cent, to 2,760.16 and the Nasdaq Composite IXIC added 57.45 points, or 0.79 per cent, to 7,330.54.

Of the 11 major sectors in the S&amp;P 500, all but energy SPNY&nbsp;ended the session in positive territory.

Energy stocks fell 0.2 per cent as crude prices LCOc1&nbsp;extended their slide.

But falling oil prices boosted airlines stocks. The Dow Jones Airlines index DJUSAR rose 2.8 per cent.

Shares of Marriott International Inc MAR.O sank 5.6 per cent after the hotel operator said hackers stole about 500 million records from its Starwood Hotels reservation system.

General Electric Co GEN&nbsp;shares slid 5.5 per cent following a Wall Street Journal report that former employees are being questioned by federal investigators about the company's failure to acknowledge its insurance business' worsening results over the years.

Advancing issues outnumbered declining ones on the NYSE by a 1.17-to-1 ratio; on Nasdaq, a 1.24-to-1 ratio favoured advancers.

The S&amp;P 500 posted 28 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 49 new highs and 90 new lows.

Volume on US exchanges was 8.39 billion shares, compared to the 7.63 billion average for the full session over the last 20 trading days.

Wall Street rose on Friday as investors hoped for progress on trade in a critical US-China meeting over the weekend, and the S&P 500 and the Nasdaq posted their biggest weekly percentage gains in nearly seven years.

Wall Street rose on Friday as investors hoped for progress on trade in a critical US-China meeting over the weekend, and the S&P 500 and the Nasdaq posted their biggest weekly percentage gains in nearly seven years. The Dow saw its largest weekly advance in two years. Investors were encouraged this week by comments by Federal Reserve Chair Jerome Powell and subsequent minutes from the central bank's latest meeting that suggested that the Fed will take a data-driven rather than ideological approach to future rate hikes. All three major US indexes recorded modest monthly percentage gains for November. A Chinese official said "consensus is steadily increasing" in trade negotiations between the US and China as the G20 meeting got underway in Buenos Aires, sparking hopes there would be a positive resolution in the ongoing tariff dispute between the world's two largest economies. US President Donald Trump is set to meet with his Chinese counterpart Xi Jinping on Saturday and the outcome could swing stocks for the rest of the year. "The three key issues that people are really focusing on are how dovish is the Fed going to be going forward, how are trade relations with China going to play out, and what's going on in the oil markets," said Charlie Ripley, senior market strategist for Allianz Investment Management in Minneapolis. "But as we get better news, that's helped lift the markets," Ripley added. "That's why we're seeing a week like this week." The Dow Jones Industrial Average.DJI rose 199.62 points, or 0.79 per cent, to 25,538.46, the S&P 500 SPX gained 22.4 points, or 0.82 per cent, to 2,760.16 and the Nasdaq Composite IXIC added 57.45 points, or 0.79 per cent, to 7,330.54. Of the 11 major sectors in the S&P 500, all but energy SPNY ended the session in positive territory. Energy stocks fell 0.2 per cent as crude prices LCOc1 extended their slide. But falling oil prices boosted airlines stocks. The Dow Jones Airlines index DJUSAR rose 2.8 per cent. Shares of Marriott International Inc MAR.O sank 5.6 per cent after the hotel operator said hackers stole about 500 million records from its Starwood Hotels reservation system. General Electric Co GEN shares slid 5.5 per cent following a Wall Street Journal report that former employees are being questioned by federal investigators about the company's failure to acknowledge its insurance business' worsening results over the years. Advancing issues outnumbered declining ones on the NYSE by a 1.17-to-1 ratio; on Nasdaq, a 1.24-to-1 ratio favoured advancers. The S&P 500 posted 28 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 49 new highs and 90 new lows. Volume on US exchanges was 8.39 billion shares, compared to the 7.63 billion average for the full session over the last 20 trading days.

Wall Street rises on trade hopes; S&P, Nasdaq post best weeks in seven years

US sanctions against importers of Iranian oil threaten the crude oil market's precarious balance and risk surging prices, all under Saudi Arabia's watchful gaze, according to experts.

"In the next weeks all eyes will be on Iranian exports, whether there will be some cheating around US sanctions, and on how quickly production will fall," said Riccardo Fabiani, an analyst for Energy Aspects.

The US will from Monday target buyers of Iranian oil in order to deprive Tehran of its main source of income.&nbsp;

Going after Iran's oil money will hit Tehran where it hurts, but it also means hitting a major pillar of the global oil market -- Iran is the OPEC cartel's third-largest producer -- with major consequences for world supply.

Iran exported the equivalent of 2.5 million barrels a day in April, before&nbsp;the announcement of sanctions turned buyers away.&nbsp;

"Even if the United States grants exemptions, Washington will demand that the volume imported from Iran be significantly reduced," said UBS analyst Giovanni Staunovo, who expects prices to rise.&nbsp;

Exemptions&nbsp;

However, oil prices have fallen by nearly $15 in less than a month, after peaking in early October at their highest level in two and a half years, with a barrel of Brent at over $85.&nbsp;

Part of the explanation lies in the ambiguous position of the US, which initially insisted that the sanctions were designed to reduce Iranian exports to zero barrels, but has since has softened its position.&nbsp;

Secretary of State Mike Pompeo on Friday announced exemptions for eight countries, without naming them.&nbsp;

Turkey indicated that it was one of them and analysts believe that India, one of the world's largest importers, is also on the list, which will be published on Monday.

"India said to the US that they can't stop before March, they are facing a major currency crisis," explained Joel Hancock, analyst at Natixis.&nbsp;

Consumer confidence in the US itself could also suffer if rising oil prices translate into higher prices at the pump.

"If prices start to rise again or another major producer has difficulties, it could put pressure on the US and lead to new exemptions," said Fabiani.

Saudi uncertainty&nbsp;

The other major oil producing countries are expected to ramp up production to try and compensate for Iran's anticipated decline in output.&nbsp;

But in doing so, they run the risk of hampering their ability to react to any future crises.&nbsp;

Saudi Arabia, the world's largest exporter, has claimed that it can respond to the Iranian shortfall, but some market players are wondering whether the kingdom is exhausting its capacities.&nbsp;

"Saudi Arabia can produce 12 million barrels a day, but only if it invests," said Hancock, noting that the country currently produces just under 11 million barrels a day.&nbsp;

He believes that Riyadh can currently only rely on 300,000 barrels per day of spare capacity, the extraction of which can be launched in fewer than 30 days.&nbsp;

"The mantra right now is to go to Saudi Arabia but its exports have remained flat at around 10 or 10.2 million barrels a day," said Samir Madani, an analyst at Tanker Trackers, which specialises in satellite tanker tracking.&nbsp;

"The big increase right now is Iraq at 4.2 million, which I've never seen before," he added.

The US, which is in the process of becoming the world's leading producer thanks to its shale oil operations, could meet part of the demand, but lacks export capacity, said the analyst.

US sanctions against importers of Iranian oil threaten the crude oil market's precarious balance and risk surging prices, all under Saudi Arabia's watchful gaze, according to experts.

US sanctions against importers of Iranian oil threaten the crude oil market's precarious balance and risk surging prices, all under Saudi Arabia's watchful gaze, according to experts. "In the next weeks all eyes will be on Iranian exports, whether there will be some cheating around US sanctions, and on how quickly production will fall," said Riccardo Fabiani, an analyst for Energy Aspects. The US will from Monday target buyers of Iranian oil in order to deprive Tehran of its main source of income. Going after Iran's oil money will hit Tehran where it hurts, but it also means hitting a major pillar of the global oil market -- Iran is the OPEC cartel's third-largest producer -- with major consequences for world supply. Iran exported the equivalent of 2.5 million barrels a day in April, before the announcement of sanctions turned buyers away. "Even if the United States grants exemptions, Washington will demand that the volume imported from Iran be significantly reduced," said UBS analyst Giovanni Staunovo, who expects prices to rise. Exemptions However, oil prices have fallen by nearly $15 in less than a month, after peaking in early October at their highest level in two and a half years, with a barrel of Brent at over $85. Part of the explanation lies in the ambiguous position of the US, which initially insisted that the sanctions were designed to reduce Iranian exports to zero barrels, but has since has softened its position. Secretary of State Mike Pompeo on Friday announced exemptions for eight countries, without naming them. Turkey indicated that it was one of them and analysts believe that India, one of the world's largest importers, is also on the list, which will be published on Monday. "India said to the US that they can't stop before March, they are facing a major currency crisis," explained Joel Hancock, analyst at Natixis. Consumer confidence in the US itself could also suffer if rising oil prices translate into higher prices at the pump. "If prices start to rise again or another major producer has difficulties, it could put pressure on the US and lead to new exemptions," said Fabiani. Saudi uncertainty The other major oil producing countries are expected to ramp up production to try and compensate for Iran's anticipated decline in output. But in doing so, they run the risk of hampering their ability to react to any future crises. Saudi Arabia, the world's largest exporter, has claimed that it can respond to the Iranian shortfall, but some market players are wondering whether the kingdom is exhausting its capacities. "Saudi Arabia can produce 12 million barrels a day, but only if it invests," said Hancock, noting that the country currently produces just under 11 million barrels a day. He believes that Riyadh can currently only rely on 300,000 barrels per day of spare capacity, the extraction of which can be launched in fewer than 30 days. "The mantra right now is to go to Saudi Arabia but its exports have remained flat at around 10 or 10.2 million barrels a day," said Samir Madani, an analyst at Tanker Trackers, which specialises in satellite tanker tracking. "The big increase right now is Iraq at 4.2 million, which I've never seen before," he added. The US, which is in the process of becoming the world's leading producer thanks to its shale oil operations, could meet part of the demand, but lacks export capacity, said the analyst.

Oil market on alert as Iran sanctions hit

By - Amy Myers Jaffe &amp; Lewis Fulton

When will cars powered by gas-guzzling internal combustion engines become obsolete? Not as soon as it seems, even with the latest automotive news out of Europe.

<a href="https://www.media.volvocars.com/global/en-gb/media/pressreleases/210058/volvo-cars-to-go-all-electric">First, Volvo announced</a> it would begin to phase out the production of cars that run solely on gasoline or diesel by 2019 by only releasing new models that are electric or plug-in hybrids. <a href="http://money.cnn.com/2017/07/06/technology/france-cars-gas-electric-diesel/index.html">Then, France</a> and <a href="https://www.bloomberg.com/news/articles/2017-07-25/u-k-to-ban-diesel-and-petrol-cars-from-2040-daily-telegraph">the U.K.</a> declared they would ban sales of gas and diesel-powered cars by 2040. Underscoring this trend is data from Norway, as electric models amounted to <a href="https://electrek.co/2017/07/04/electric-car-norway-tesla-model-x/">42 per cent of Norwegian new car sales</a> in June.

<a href="http://www.resilience.org/stories/2015-08-31/europe-oil-consumption-peaked-2005/">European demand for oil</a> to propel its passenger vehicles has been falling for years. Many experts expect a sharper decline in the years ahead as the shift toward electric vehicles spreads across the world. And that raises questions about whether surging electric vehicle sales will ultimately cause the global oil market, which has grown on average by 1 to 2 per cent a year for decades and now totals <a href="https://www.iea.org/about/faqs/oil/">96 million barrels per day</a>, to decline after hitting a ceiling.

Energy experts call this concept &ldquo;peak oil demand.&rdquo; We are debating when and if this will occur.

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The sun isn&rsquo;t set on the oil industry just yet, but experts say oil demand could max out within a few decades. (Others)
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A forecast with caveats

The International Energy Agency (IEA), which represents 29 oil-importing industrial countries, produces bellwether forecasts that foresee electric cars phasing in slowly. Its baseline projection envisions <a href="https://www.iea.org/publications/freepublications/publication/global-ev-outlook-2017.html">140 million electric vehicles</a> on the world&rsquo;s roads by 2040, or about 7 per cent of all passenger vehicles at that point. In comparison, only two million electric vehicles are operating today &ndash; 0.2 per cent of the <a href="http://www.greencarreports.com/news/1093560_1-2-billion-vehicles-on-worlds-roads-now-2-billion-by-2035-report">1.2 billion</a> on the road. The IEA estimates this shift will save nearly two million barrels per day of oil, relative to its business-as-usual projection of the world using at least 70 million barrels of oil per day for transportation by 2040. That consumption level would mark a 30 per cent increase from roughly 54 million barrels now.

If electric vehicles sales grow faster than the IEA expects, that projection might miss the mark. Should that happen, would global oil demand flatten or decline?

Our research at the Institute of Transportation Studies at the <a href="https://its.ucdavis.edu/blog-post/what-happens-when-demand-for-oil-peaks/">University of California, Davis</a> shows that encouraging electric vehicle purchases is just one-way policymakers can help phase out oil consumption &ndash; one key to reducing the greenhouse gas emissions that stoke climate change and health-threatening pollution.

Given the dominance of internal combustion engine passenger vehicles, which include cars, SUVs, and light trucks, replacing them all with <a href="http://www.sciencedirect.com/science/article/pii/S0301421510002739">electric models</a> will take decades. Automobiles are durable goods that typically remain on the road for 10 to 15 years. Not all drivers will buy a new car, let alone an electric one, soon.

In other words, even if (hypothetically) all new car sales were to instantly turn electric, it would likely be sometime after 2030 before gasoline cars would disappear. Besides, passenger vehicles consume only about 26 per cent of the oil used worldwide. Given these stubborn realities and the fact that electric vehicles still represent a tiny portion of new-car sales, reaching a peak in oil demand by 2040 would require more than widespread conversion to electric-powered cars.

But together with other trends taking shape, electric vehicle growth could potentially revolutionize transportation enough for oil consumption to stop growing within this time frame.

<figure class="align-center zoomable"><a href="https://cdn.theconversation.com/files/179839/area14mp/file-20170726-30152-1rjjtiu.jpg"><img alt="" src="https://cdn.theconversation.com/files/179839/width754/file-20170726-30152-1rjjtiu.jpg" /></a>

<figcaption>
Waymo, the self-driving car company owned by Google&rsquo;s parent Alphabet, is teaming up with rideshare company Lyft. <a class="source" href="http://www.apimages.com/metadata/Index/TEC-Waymo-Lyft/09db258a44bb40a788cd104d70065416/7/0">AP Photo/Eric Risberg</a>

Ride-sharing and oil
</figcaption>
</figure>

Even if all of Europe mandated that only plug-in vehicles could be sold, starting in 2030, and China followed suit by 2035, that wouldn&rsquo;t bring about peak oil demand by 2040. According to our research, global oil consumption would keep growing until as late as 2050, in part because so many cars and trucks running on gasoline and diesel &ndash; especially in developing countries &ndash; will remain in use.

To see if oil demand could still peak by the middle of this century if not sooner, we recently began preliminary research modeling the effect of urban sustainability policies on oil demand in the future. This is an important area of analysis since <a href="https://www.usmayors.org/2017/06/02/mayors-undeterred-by-paris-climate-accord-withdrawal/">U.S. mayors</a> and municipal leaders from around the world <a href="https://apnews.com/fbb2bab100734ec194e4976ae9c17ac4">reaffirmed</a> their commitment to climate-change action after President Donald Trump decided to back out of the Paris climate accord.

Using a set of scenarios regarding potential technological and policy interventions in work we will publish soon, we modeled different future oil market demand conditions. We focused on four major trend lines: vehicle electrification, ride-sharing services like Uber and Lyft, more sustainable freight that runs on alternative fuels or reduces vehicle miles traveled through computer-assisted optimization, and urban car-free zones.

We found that making more car-free pedestrian areas in big cities would make a huge dent in global oil demand. This practice &ndash; already common in cities like Copenhagen and Madrid in Europe and Chendu, China &ndash; could make oil demand max out by 2030, as long as enough governments aggressively encouraged drivers to switch to electric cars and mandated more fuel efficiency for road-based freight.

Trucks don&rsquo;t last as long as cars, and many countries are considering policies to encourage the use of <a href="http://www.reuters.com/article/china-lng-transport-idUSL4N0AL6UI20130228">natural gas</a>, <a href="https://www.forbes.com/sites/alanohnsman/2017/04/19/toyota-rolls-out-hydrogen-semi-ahead-of-teslas-electric-truck/#1912e4db582b">hydrogen</a> or <a href="http://www.truckinginfo.com/channel/fuel-smarts/news/story/2017/01/real-world-electric-highway-tests-begin-in-sweden.aspx">electric vehicles</a> for heavy-duty trucking.

Commercial ride-sharing might also pare oil demand by reducing the number of miles driven overall if it encourages carpooling. This industry could, in addition, hasten the shift to electric vehicle dominance if &ndash; as widely reported &ndash; it begins to rely on a fleet of autonomous (driverless) vehicles, which would <a href="https://www.usatoday.com/story/money/cars/2016/09/19/why-most-self-driving-cars-electric/90614734/">predominantly be electric</a>.

But ride-sharing could fail to reduce fuel demand in the short term if people wind up taking more trips and traveling more miles in passenger cars and relying less on the bus, transit or city train than they used to. Some research suggests that could be happening. For example, scholars at University of California, Berkeley found that a third of the riders they surveyed in San Francisco used these services <a href="http://www.sciencedirect.com/science/article/pii/S0967070X15300627?via%3Dihub">instead of public transportation</a> &ndash; not to replace trips in taxis or their own cars.

In short, there is no guarantee that more ride-sharing means we&rsquo;ll burn less oil.

What cities can do

<a href="https://its.ucdavis.edu/blog-post/how-to-combine-three-revolutions-in-transportation-for-maximum-benefit-worldwide/">In another study</a>, our team at UC Davis teamed up with the Institute for Transportation and Development Policy, an independent global nonprofit, and modeled three urban transportation policy scenarios. We found that global new vehicle sales in 2040 will total between 600 million, if ride-sharing and transit flourish, and 2.1 billion vehicles, should the ride-sharing industry stall &ndash; a huge difference.

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When cities establish pedestrian-only streets like Drottninggatan in the Swedish city of Stockholm, it helps people drive less. (Others)
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Metropolitan policymakers can use other tools. Creating car-free zones, making parking expensive and levying congestion taxes and road usage fees are some examples.

Overall, we believe there is a reasonable chance global oil consumption will peak by 2040. Especially, given the growing preference of city dwellers to live in places with <a href="http://www.smartertransport.uk/smarter-cambridge-transport-urban-congestion-enquiry/">less congestion and pollution</a>, a shift away from cars with internal combustion engines &ndash; and from cars in general &ndash; looks not only likely but inevitable. It also seems fairly likely that <a href="http://oilprice.com/Energy/Oil-Prices/Are-Supermajors-Spooked-By-Peak-Oil-Demand.html">any company betting</a> on the continued growth of oil sales will be disappointed.

Goldman Sachs says the world could pass this milestone sooner. Researchers at the U.S. investment powerhouse predict that with widespread reliance on electric cars, slower economic growth and a decline in (largely petrochemical-based) <a href="https://www.ellenmacarthurfoundation.org/publications/the-new-plastics-economy-rethinking-the-future-of-plastics">plastic production</a>, global oil demand could <a href="http://uk.reuters.com/article/research-crude-goldman-idUKL3N1KF3ER">max out by 2030</a>.

However long it takes, shifting to electric vehicles might not make oil demand level off or decline on its own. But plug-in vehicles, combined with other policies, trends, and technologies, will clearly take a toll.

&nbsp;

<img alt="The Conversation" height="1" src="https://counter.theconversation.edu.au/content/81081/count.gif?distributor=republish-lightbox-basic" width="1" />This article has been updated to correct the number of electric vehicles the International Energy Agency includes in its baseline scenario.

This article was originally published on <a href="http://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/how-electric-vehicles-could-take-a-bite-out-of-the-oil-market-81081">original article</a>.

In the next 20 years, 138 million more electric cars will hit the road, says the International Energy Agency.

By - Amy Myers Jaffe & Lewis Fulton When will cars powered by gas-guzzling internal combustion engines become obsolete? Not as soon as it seems, even with the latest automotive news out of Europe. First, Volvo announced it would begin to phase out the production of cars that run solely on gasoline or diesel by 2019 by only releasing new models that are electric or plug-in hybrids. Then, France and the U.K. declared they would ban sales of gas and diesel-powered cars by 2040. Underscoring this trend is data from Norway, as electric models amounted to 42 per cent of Norwegian new car sales in June. European demand for oil to propel its passenger vehicles has been falling for years. Many experts expect a sharper decline in the years ahead as the shift toward electric vehicles spreads across the world. And that raises questions about whether surging electric vehicle sales will ultimately cause the global oil market, which has grown on average by 1 to 2 per cent a year for decades and now totals 96 million barrels per day, to decline after hitting a ceiling. Energy experts call this concept “peak oil demand.” We are debating when and if this will occur. The sun isn’t set on the oil industry just yet, but experts say oil demand could max out within a few decades. (Others) × A forecast with caveats The International Energy Agency (IEA), which represents 29 oil-importing industrial countries, produces bellwether forecasts that foresee electric cars phasing in slowly. Its baseline projection envisions 140 million electric vehicles on the world’s roads by 2040, or about 7 per cent of all passenger vehicles at that point. In comparison, only two million electric vehicles are operating today – 0.2 per cent of the 1.2 billion on the road. The IEA estimates this shift will save nearly two million barrels per day of oil, relative to its business-as-usual projection of the world using at least 70 million barrels of oil per day for transportation by 2040. That consumption level would mark a 30 per cent increase from roughly 54 million barrels now. If electric vehicles sales grow faster than the IEA expects, that projection might miss the mark. Should that happen, would global oil demand flatten or decline? Our research at the Institute of Transportation Studies at the University of California, Davis shows that encouraging electric vehicle purchases is just one-way policymakers can help phase out oil consumption – one key to reducing the greenhouse gas emissions that stoke climate change and health-threatening pollution. Given the dominance of internal combustion engine passenger vehicles, which include cars, SUVs, and light trucks, replacing them all with electric models will take decades. Automobiles are durable goods that typically remain on the road for 10 to 15 years. Not all drivers will buy a new car, let alone an electric one, soon. In other words, even if (hypothetically) all new car sales were to instantly turn electric, it would likely be sometime after 2030 before gasoline cars would disappear. Besides, passenger vehicles consume only about 26 per cent of the oil used worldwide. Given these stubborn realities and the fact that electric vehicles still represent a tiny portion of new-car sales, reaching a peak in oil demand by 2040 would require more than widespread conversion to electric-powered cars. But together with other trends taking shape, electric vehicle growth could potentially revolutionize transportation enough for oil consumption to stop growing within this time frame. Waymo, the self-driving car company owned by Google’s parent Alphabet, is teaming up with rideshare company Lyft. AP Photo/Eric Risberg Ride-sharing and oil Even if all of Europe mandated that only plug-in vehicles could be sold, starting in 2030, and China followed suit by 2035, that wouldn’t bring about peak oil demand by 2040. According to our research, global oil consumption would keep growing until as late as 2050, in part because so many cars and trucks running on gasoline and diesel – especially in developing countries – will remain in use. To see if oil demand could still peak by the middle of this century if not sooner, we recently began preliminary research modeling the effect of urban sustainability policies on oil demand in the future. This is an important area of analysis since U.S. mayors and municipal leaders from around the world reaffirmed their commitment to climate-change action after President Donald Trump decided to back out of the Paris climate accord. Using a set of scenarios regarding potential technological and policy interventions in work we will publish soon, we modeled different future oil market demand conditions. We focused on four major trend lines: vehicle electrification, ride-sharing services like Uber and Lyft, more sustainable freight that runs on alternative fuels or reduces vehicle miles traveled through computer-assisted optimization, and urban car-free zones. We found that making more car-free pedestrian areas in big cities would make a huge dent in global oil demand. This practice – already common in cities like Copenhagen and Madrid in Europe and Chendu, China – could make oil demand max out by 2030, as long as enough governments aggressively encouraged drivers to switch to electric cars and mandated more fuel efficiency for road-based freight. Trucks don’t last as long as cars, and many countries are considering policies to encourage the use of natural gas, hydrogen or electric vehicles for heavy-duty trucking. Commercial ride-sharing might also pare oil demand by reducing the number of miles driven overall if it encourages carpooling. This industry could, in addition, hasten the shift to electric vehicle dominance if – as widely reported – it begins to rely on a fleet of autonomous (driverless) vehicles, which would predominantly be electric. But ride-sharing could fail to reduce fuel demand in the short term if people wind up taking more trips and traveling more miles in passenger cars and relying less on the bus, transit or city train than they used to. Some research suggests that could be happening. For example, scholars at University of California, Berkeley found that a third of the riders they surveyed in San Francisco used these services instead of public transportation – not to replace trips in taxis or their own cars. In short, there is no guarantee that more ride-sharing means we’ll burn less oil. What cities can do In another study, our team at UC Davis teamed up with the Institute for Transportation and Development Policy, an independent global nonprofit, and modeled three urban transportation policy scenarios. We found that global new vehicle sales in 2040 will total between 600 million, if ride-sharing and transit flourish, and 2.1 billion vehicles, should the ride-sharing industry stall – a huge difference. When cities establish pedestrian-only streets like Drottninggatan in the Swedish city of Stockholm, it helps people drive less. (Others) × Metropolitan policymakers can use other tools. Creating car-free zones, making parking expensive and levying congestion taxes and road usage fees are some examples. Overall, we believe there is a reasonable chance global oil consumption will peak by 2040. Especially, given the growing preference of city dwellers to live in places with less congestion and pollution, a shift away from cars with internal combustion engines – and from cars in general – looks not only likely but inevitable. It also seems fairly likely that any company betting on the continued growth of oil sales will be disappointed. Goldman Sachs says the world could pass this milestone sooner. Researchers at the U.S. investment powerhouse predict that with widespread reliance on electric cars, slower economic growth and a decline in (largely petrochemical-based) plastic production, global oil demand could max out by 2030. However long it takes, shifting to electric vehicles might not make oil demand level off or decline on its own. But plug-in vehicles, combined with other policies, trends, and technologies, will clearly take a toll. This article has been updated to correct the number of electric vehicles the International Energy Agency includes in its baseline scenario. This article was originally published on The Conversation. Read the original article.

Will oil-driven car vanish with new electric vehicles on the roads?

The International Energy Agency on Tuesday warned that the global oil glut looks set to go on at least six months longer than previously anticipated.&nbsp; 
 
The IEA said the glut was due to linger owing to slowdown in demand and constant rise in supply. 
 
The oil glut has hurt producers but it means cheaper pump prices for consumers at least through the first half of next year.&nbsp; 
 
The Paris-based organisation had earlier seen the oil oversupply disappearing in the latter part of 2016. 
 
In its monthly report, the IEA said the timing of the world oil market&#39;s return to balance is &quot;the big question.&quot; It added that the current prices - above $45 - would suggest supply falling and strong demand growth. 
 
The IEA&#39;s latest comments follow a surprisingly bearish outlook from OPEC on Monday. Crude prices were down 47 cents at $47.85 a barrel. 
 
The trend may fuel speculation of a possible production freeze being agreed between OPEC and non-OPEC member Russia at a meeting in Algeria later this month. 
 
Analyst Olivier Jakob, of Switzerland-based Petromatrix, said OPEC was &quot;trapped&quot; as non-OPEC supply had been able to adapt to lower prices better than expected. 
 
&quot;The IEA data is also suggesting that an OPEC &#39;freeze&#39; will not be enough to rebalance the market in 2017,&quot; he said in a note to investors. 
 
China and India, which had been key drivers recently of demand growth, are &quot;wobbling&quot;, it said, while a slowdown in the US and economic concerns in developing countries have also contributed to the surprise development. 
 
(WION with inputs from agencies)

The IEA has cut its projections for global oil demand for 2017; oversupply threatens production freeze

The International Energy Agency on Tuesday warned that the global oil glut looks set to go on at least six months longer than previously anticipated. The IEA said the glut was due to linger owing to slowdown in demand and constant rise in supply. The oil glut has hurt producers but it means cheaper pump prices for consumers at least through the first half of next year. The Paris-based organisation had earlier seen the oil oversupply disappearing in the latter part of 2016. In its monthly report, the IEA said the timing of the world oil market's return to balance is "the big question." It added that the current prices - above $45 - would suggest supply falling and strong demand growth. The IEA's latest comments follow a surprisingly bearish outlook from OPEC on Monday. Crude prices were down 47 cents at $47.85 a barrel. The trend may fuel speculation of a possible production freeze being agreed between OPEC and non-OPEC member Russia at a meeting in Algeria later this month. Analyst Olivier Jakob, of Switzerland-based Petromatrix, said OPEC was "trapped" as non-OPEC supply had been able to adapt to lower prices better than expected. "The IEA data is also suggesting that an OPEC 'freeze' will not be enough to rebalance the market in 2017," he said in a note to investors. China and India, which had been key drivers recently of demand growth, are "wobbling", it said, while a slowdown in the US and economic concerns in developing countries have also contributed to the surprise development. (WION with inputs from agencies)

Global oil glut to continue until mid-2017: International Energy Agency

Crude oil futures rose sharply on Monday amid renewed speculation that major producers including Saudi Arabia and Russia could cooperate to tackle weak prices and rein in oversupply. 
 
Brent crude futures for November delivery were up $2.09 per barrel at $48.92 a barrel at 0902 GMT. 
 
US crude for October delivery was up $1.70 a barrel at $46.14 a barrel. 
 
Saudi Arabia and Russia later on Monday are due to make a joint statement during the G20 summit in China calling for cooperation to support oil markets, several sources with knowledge of the matter said. 
 
One of the sources added Russia would likely attend the upcoming meeting of the Organisation of the Petroleum Exporting Countries which will be held in Vienna in November. 
 
This comes after Saudi deputy crown prince told Russian President Vladimir Putin on the sidelines of the same summit that cooperation between the two countries would bring benefit to the global oil market. 
 
Saudi energy minister Khalid al-Falih will make a &quot;significant announcement&quot; at a news conference at 0930 at the summit. 
 
&quot;Verbal intervention was again needed to trigger a recovery towards $50,&quot; senior ABN Amro economist Hans van Cleef said. 
 
&quot;After all, if prices remain too low ahead of the meeting, there is a risk that at some point Russia and Saudi Arabia actually need to act. That would probably be the last thing they want as long as Iran is raising output.&quot; 
 
Brent rallied to above $50 a barrel in late August, helped by growing talk of a coordinated production freeze, but prices have since fallen as few believe OPEC will act. 
 
Russian Energy Minister Alexander Novak has said that an oil production freeze would be one of the issues discussed by crude producers later this month in Algeria. 
 
Iran, OPEC&#39;s third largest producer, has said it would only cooperate in talks to freeze output if fellow exporters recognised its right to fully regain market share. 
 
Iran is ready to raise its output to 4 million barrels per day in a couple of months depending on market demand, a senior official from the National Iranian Oil Company said. 
 
&quot;Even if successful, an OPEC freeze would likely be a short-term positive but a medium-term negative for oil prices,&quot; Morgan Stanley analysts wrote in a note. 
 
(Reuters)

Brent crude futures for November delivery were up $2.09 per barrel at $48.92 a barrel

Crude oil futures rose sharply on Monday amid renewed speculation that major producers including Saudi Arabia and Russia could cooperate to tackle weak prices and rein in oversupply. Brent crude futures for November delivery were up $2.09 per barrel at $48.92 a barrel at 0902 GMT. US crude for October delivery was up $1.70 a barrel at $46.14 a barrel. Saudi Arabia and Russia later on Monday are due to make a joint statement during the G20 summit in China calling for cooperation to support oil markets, several sources with knowledge of the matter said. One of the sources added Russia would likely attend the upcoming meeting of the Organisation of the Petroleum Exporting Countries which will be held in Vienna in November. This comes after Saudi deputy crown prince told Russian President Vladimir Putin on the sidelines of the same summit that cooperation between the two countries would bring benefit to the global oil market. Saudi energy minister Khalid al-Falih will make a "significant announcement" at a news conference at 0930 at the summit. "Verbal intervention was again needed to trigger a recovery towards $50," senior ABN Amro economist Hans van Cleef said. "After all, if prices remain too low ahead of the meeting, there is a risk that at some point Russia and Saudi Arabia actually need to act. That would probably be the last thing they want as long as Iran is raising output." Brent rallied to above $50 a barrel in late August, helped by growing talk of a coordinated production freeze, but prices have since fallen as few believe OPEC will act. Russian Energy Minister Alexander Novak has said that an oil production freeze would be one of the issues discussed by crude producers later this month in Algeria. Iran, OPEC's third largest producer, has said it would only cooperate in talks to freeze output if fellow exporters recognised its right to fully regain market share. Iran is ready to raise its output to 4 million barrels per day in a couple of months depending on market demand, a senior official from the National Iranian Oil Company said. "Even if successful, an OPEC freeze would likely be a short-term positive but a medium-term negative for oil prices," Morgan Stanley analysts wrote in a note. (Reuters)

Oil jumps amid talk of producer action to support prices

Iran&#39;s oil minister said today the oil market was oversupplied but predicted balance between demand and supply will be restored, Iranian state television reported on Monday. 
 
&quot;The oil market is oversupplied now but there are expectations that there will be balance between demand and supply in the market,&quot; Bijan Namdar Zanganeh was quoted as saying by Iran&#39;s state TV, without saying when that may happen. 
 
A Reuters survey on Friday showed the Organization of the Petroleum Exporting Countries&#39; (OPEC) oil output was likely to reach its highest in recent history in July as Iraq pumps more and Nigeria manages to export additional crude despite militant attacks. 
 
Supply from OPEC rose to 33.41 million barrels per day (bpd) in July from a revised 33.31 million bpd in June, according to the survey based on shipping data and information from industry sources. 
 
Iran planning to raise crude production&nbsp; 
 
Since a landmark nuclear deal was reached with major powers in 2015 leading to lifting of sanctions, Iran has been planning to raise its crude production to the pre-sanctions level of four million barrels per day (bpd). 
 
To regain the production level, Iran has sweetened the terms it offers on oil development contracts to draw the interest of foreign investors. Iran needs $200 billion in foreign money to reach its goal. 
 
Zanganeh said that the first of Iran&#39;s new oil and gas investment contracts for international companies will be launched this week. 
 
&quot;The government will approve the new contracts on Wednesday,&quot; Zanganeh told reporters, state TV reported. 
 
The launch of Iran&#39;s new oil contracts, the Iran Petroleum Contract (IPC) has been postponed several times as hardline rivals of pragmatist President Hassan Rouhani resisted any deal that could end the buy-back system. 
 
Iran&#39;s top authority supreme leader Ayatollah Ali Khamenei said last month that no new oil and gas contracts for international companies will be awarded without necessary reforms. 
 
&quot;Iran&#39;s priority is developing jointly owned oil and gas fields, as well as those in which we are after improved oil recovery.&quot; Zanganeh said 
 
Oil majors have said they would only go back to Iran if it made major changes to the buy-back contracts of the 1990s, which companies such as France&#39;s Total or Italy&#39;s Eni, said made them no money or even incurred losses. 
 
Under Iran&#39;s buy-back system foreign firms have been banned from booking reserves or taking equity stakes in Iranian companies. 
 
(Reuters)

A recent survey showed OPEC output was likely to reach its highest in recent history

Iran's oil minister said today the oil market was oversupplied but predicted balance between demand and supply will be restored, Iranian state television reported on Monday. "The oil market is oversupplied now but there are expectations that there will be balance between demand and supply in the market," Bijan Namdar Zanganeh was quoted as saying by Iran's state TV, without saying when that may happen. A Reuters survey on Friday showed the Organization of the Petroleum Exporting Countries' (OPEC) oil output was likely to reach its highest in recent history in July as Iraq pumps more and Nigeria manages to export additional crude despite militant attacks. Supply from OPEC rose to 33.41 million barrels per day (bpd) in July from a revised 33.31 million bpd in June, according to the survey based on shipping data and information from industry sources. Iran planning to raise crude production Since a landmark nuclear deal was reached with major powers in 2015 leading to lifting of sanctions, Iran has been planning to raise its crude production to the pre-sanctions level of four million barrels per day (bpd). To regain the production level, Iran has sweetened the terms it offers on oil development contracts to draw the interest of foreign investors. Iran needs $200 billion in foreign money to reach its goal. Zanganeh said that the first of Iran's new oil and gas investment contracts for international companies will be launched this week. "The government will approve the new contracts on Wednesday," Zanganeh told reporters, state TV reported. The launch of Iran's new oil contracts, the Iran Petroleum Contract (IPC) has been postponed several times as hardline rivals of pragmatist President Hassan Rouhani resisted any deal that could end the buy-back system. Iran's top authority supreme leader Ayatollah Ali Khamenei said last month that no new oil and gas contracts for international companies will be awarded without necessary reforms. "Iran's priority is developing jointly owned oil and gas fields, as well as those in which we are after improved oil recovery." Zanganeh said Oil majors have said they would only go back to Iran if it made major changes to the buy-back contracts of the 1990s, which companies such as France's Total or Italy's Eni, said made them no money or even incurred losses. Under Iran's buy-back system foreign firms have been banned from booking reserves or taking equity stakes in Iranian companies. (Reuters)

Iran says crude market oversupplied but balance will be restored

Oil futures were steady on Monday following comments from the Saudi energy minister that the market was heading towards balance, even if signs of slowing demand in Asia weighed. 
 
Brent crude futures were trading at $50.31 per barrel at 0441 GMT, almost unchanged from their last settlement. US crude oil were down 5 cents at $48.94. 
 
There will be no West Texas Intermediate crude settlement on Monday as US financial and commodity markets are closed for the US Independence Day holiday. 
 
&quot;Fundamentals offer limited scope for further price gains and we expect Brent to trade broadly sideways over the coming months,&quot; said analysts at BMI Research. 
 
The energy minister of Saudi Arabia, the world&#39;s top crude exporter, and the secretary general of producer club OPEC agreed that global oil markets were heading towards balance and that prices reflect this. 
 
Crude futures are drawing some support from concerns over output in Nigeria, where a militant group has been carrying out attacks on oil facilities over the past months. 
 
Attacks in the Niger Delta have pushed Nigerian crude production to 30-year lows, although the Nigerian National Petroleum Corporation said last week that output was rising following repairs. 
 
&quot;After another counter-seasonal summer build, gasoline cracks now trade below diesel, which should force refiners to act. The end result is likely to be run cuts, with some signs already emerging for 3Q,&quot; Morgan Stanley said on Monday. 
 
&quot;Asia refiners have already started to pull back ... and there are reports of cargoes struggling to sell,&quot; it added. 
 
Higher oil output is another factor that could cap prices. 
 
In the United States, drillers last week added oil rigs for a fourth week in five, in the best month of producers returning to the&nbsp;well pad since August 2016. 
 
Also, Russian oil output stood at 10.84 million barrels per day (bpd) in June, up from 10.83 bpd in May. 
 
In Norway, oil workers signed a deal on Saturday, avoiding a strike that would have cut output from western Europe&#39;s top oil producer by about 6 per cent. 
 
Money managers cut their net long US crude futures and options positions in the week to June 28, the US Commodity Futures Trading Commission said on Friday. 
 
(Reuters)

Fundamentals offer limited scope for further price gains and Brent is expected to trade broadly sideways over the coming months

Oil futures were steady on Monday following comments from the Saudi energy minister that the market was heading towards balance, even if signs of slowing demand in Asia weighed. Brent crude futures were trading at $50.31 per barrel at 0441 GMT, almost unchanged from their last settlement. US crude oil were down 5 cents at $48.94. There will be no West Texas Intermediate crude settlement on Monday as US financial and commodity markets are closed for the US Independence Day holiday. "Fundamentals offer limited scope for further price gains and we expect Brent to trade broadly sideways over the coming months," said analysts at BMI Research. The energy minister of Saudi Arabia, the world's top crude exporter, and the secretary general of producer club OPEC agreed that global oil markets were heading towards balance and that prices reflect this. Crude futures are drawing some support from concerns over output in Nigeria, where a militant group has been carrying out attacks on oil facilities over the past months. Attacks in the Niger Delta have pushed Nigerian crude production to 30-year lows, although the Nigerian National Petroleum Corporation said last week that output was rising following repairs. "After another counter-seasonal summer build, gasoline cracks now trade below diesel, which should force refiners to act. The end result is likely to be run cuts, with some signs already emerging for 3Q," Morgan Stanley said on Monday. "Asia refiners have already started to pull back ... and there are reports of cargoes struggling to sell," it added. Higher oil output is another factor that could cap prices. In the United States, drillers last week added oil rigs for a fourth week in five, in the best month of producers returning to the well pad since August 2016. Also, Russian oil output stood at 10.84 million barrels per day (bpd) in June, up from 10.83 bpd in May. In Norway, oil workers signed a deal on Saturday, avoiding a strike that would have cut output from western Europe's top oil producer by about 6 per cent. Money managers cut their net long US crude futures and options positions in the week to June 28, the US Commodity Futures Trading Commission said on Friday. (Reuters)

Oil steady as market moves towards balance, but slow Asian demand hurts

Oil prices rose in Asian trading on Thursday, shrugging off a smaller-than-expected decline in US stockpiles, as the market nervously awaited the result of Britain&#39;s &quot;Brexit&quot; vote. 
 
Trading has been choppy in the run-up to Thursday&#39;s vote on whether Britain leaves or stays in the European Union (EU), although markets appear to have largely priced in a &quot;Remain&quot; vote. 
&nbsp; 
Brent&#39;s August front-month contract was up 40 cents at $50.28 a barrel at 0217 GMT. It closed down 74 cents, or 1.5 per cent, at $49.88 a barrel on Wednesday. 
 
Prices for US oil were also higher, rising 43 cents to $49.56 a barrel. 
 
Once the Brexit vote is out of the way the oil market is likely to switch its focus to fundamentals, turning its attention to more potential supply disruptions that have sent prices higher this year. 
 
The worsening crisis in Venezuela, the country with the highest oil reserves, may be the next source of supply concern, said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo. 
 
&quot;There is a cloud hanging over the market from the Brexit vote, which is keeping prices down a bit,&quot; he said. &quot;If the vote comes off, we could go up,&quot; Nunan said, referring to a vote to remain in the EU. 
 
US crude inventories fell less than expected last week, while product inventories were up slightly, the US Energy Information Administration said on Wednesday. 
 
Crude inventories dropped 917,000 barrels in the week ended June 17, compared with expectations for a decrease of 1.7 million barrels. It was the fifth consecutive week of drawdowns for crude inventories. 
 
The Pound rose to a six-month high against the Dollar early on Thursday. 
 
The Yen, often a safe-haven currency for risk-averse investors, was down about 0.25 per cent, while the Nikkei rose by slightly more than that.

The Pound rose to a six-month high against the Dollar early on Thursday

Oil prices rose in Asian trading on Thursday, shrugging off a smaller-than-expected decline in US stockpiles, as the market nervously awaited the result of Britain's "Brexit" vote. Trading has been choppy in the run-up to Thursday's vote on whether Britain leaves or stays in the European Union (EU), although markets appear to have largely priced in a "Remain" vote. Brent's August front-month contract was up 40 cents at $50.28 a barrel at 0217 GMT. It closed down 74 cents, or 1.5 per cent, at $49.88 a barrel on Wednesday. Prices for US oil were also higher, rising 43 cents to $49.56 a barrel. Once the Brexit vote is out of the way the oil market is likely to switch its focus to fundamentals, turning its attention to more potential supply disruptions that have sent prices higher this year. The worsening crisis in Venezuela, the country with the highest oil reserves, may be the next source of supply concern, said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo. "There is a cloud hanging over the market from the Brexit vote, which is keeping prices down a bit," he said. "If the vote comes off, we could go up," Nunan said, referring to a vote to remain in the EU. US crude inventories fell less than expected last week, while product inventories were up slightly, the US Energy Information Administration said on Wednesday. Crude inventories dropped 917,000 barrels in the week ended June 17, compared with expectations for a decrease of 1.7 million barrels. It was the fifth consecutive week of drawdowns for crude inventories. The Pound rose to a six-month high against the Dollar early on Thursday. The Yen, often a safe-haven currency for risk-averse investors, was down about 0.25 per cent, while the Nikkei rose by slightly more than that.

Oil prices go up ahead of Brexit vote

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