03/06/2017 04:15 EST

Oil Shortage May Be On Its Way, IEA Warns In Good News For Alberta

The current oil glut turn into a shortage if new projects aren't approved, IEA warns.

HOUSTON — An international group representing oil-importing countries warns that the global supply of oil could fall short of demand after 2020 and push prices higher.

There is a worldwide glut of oil now, and the International Energy Agency says the supply looks adequate for the next three years thanks to rising production in the U.S. and a few other nations.

But the group says that supply growth will slow after 2020, with a drop in spare production capacity expected unless new projects are approved soon.

A pumpjack at sunrise. (Photo: Getty Images)

Investment in new projects fell during a slump in oil prices that began in mid-2014. In addition, OPEC members agreed to short-term cuts to boost prices.

Global energy demand is still rising, with about half the increase in China and India, but it's growing at a slower rate than a few years ago.

The international group, whose members include the U.S. and other oil-importing nations, issued its latest five-year forecast at a major energy conference Monday in Houston.

Calgary's office towers are facing record-high vacancy rates in the wake of the oil price slump. (Photo: Stuart McCall via Getty Images)

Oil prices bottomed in early 2016 below US$30 a barrel but have risen into the mid-$50s. That has sparked more pumping in the U.S. — Fatih Birol, executive director the IEA, called it the start of a second wave of output from operators in U.S. shale fields in Texas, New Mexico and North Dakota.

The size of the U.S. rebound will depend on prices, he said, with the group offering one forecast if international oil goes to US$80 a barrel and a flat outlook if it dips to $50.

Production is also rising in Brazil and Canada, but that is the result of drilling projects that were started before prices collapsed.

The group based its global forecast on Brent crude, the benchmark for international oil, being US$58 a barrel. It was trading just under US$56 on Monday.

The forecast made no assumptions about changes in policies that might be pursued by U.S. President Donald Trump, such as relaxing vehicle-efficiency standards and easing regulations on oil and gas production.

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