2016 Energy Outlook

Overview of Key Energy Developments in 2016

Strategic Communications

February 2, 2016

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2016 will be a critical year for energy policy in the EU and beyond. Most of the initiatives to be adopted as part of the EU’s Energy Union Strategy will happen this year and, finally, the EU legislature will have proposals to work on. The successful COP21 and resulting Paris agreement are yet to be ratified and implemented, but will rev up the race towards climate friendly technologies. Meanwhile, the low oil price is beginning to bear down ever more - on business, but also on politics and the global economy. With our first Energy Flash for 2016, we offer an overview of what we think qualify as the most important developments to look out for in 2016.

The Global Picture
Energy in general and the oil price in particular were always strongly linked to political developments. There has, however, been a decoupling in recent years which has made it increasingly difficult to make sense of this link or to predict how the two will influence one other. Growing instability in the Middle East will continue to mean an unpredictable oil price, leading to many open questions for 2016: How will the removal of the crude oil export ban in the US and the lifting of sanctions against Iran impact the oversupply of oil and, consequently, the oil price? Can the conflict between Saudi Arabia and Iran be contained? Will the fragile alliance between local powers and western countries be able to further push back IS in Iraq and, increasingly urgently, also in Libya? Can developed economies and leading industry players adapt to the evolving landscape? Even if OPEC were to agree to limit oil production, it is not clear to what extent this would increase oil prices. In any case it is going to be very difficult to predict how far and for how long oil prices will fall and what the resulting damage will be on the global economy and especially the oil and gas industry.

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