Another year of capex cuts will set oil market up for serious supply crunch

TOTAL global oil production could decline for the next several years in a row as scarce new sources of supply come online.

According to data from Rystad Energy, overall global oil output will fall this year as natural depletion overwhelms all new sources of supply. But the deficit will only widen in the years ahead due to the dramatic scaling back in spending on new exploration and development.

Statoil says that global capital expenditure is set to fall for two years in a row, and is on track to fall for a third year in 2017 as more spending cuts are likely. "For the first time in history, we've seen cutting of capex two years in a row and potentially we risk a third year as well for 2017," Statoil's chief financial officer (CFO) Hans Jakob Hegge told Bloomberg in a recent interview. "It might be that we see quite a dramatic reduction in replacing the capacity and of course that will have an impact, eventually, on price."