Oil price forecast to stay below $80 until 2020, IEA says

Oil prices are likely to remain low over the next five years because of plentiful supply and falling demand in developed countries, the International Energy Agency said Tuesday in its annual forecast.

The Paris-based body, which advises developed countries on energy policy, says it expects oil prices to return to $80 per barrel in 2020, with further increases after that.

Oil prices are down more than 50 per cent since the middle of last year. On Tuesday, the U.S. crude oil contract closed up 26 cents at $44.13 US a barrel.

In its World Energy Outlook, IEA warned members not to become complacent about low cost oil from a handful of producers as that could be a threat to energy security.

And it urged countries to move more quickly towards reducing greenhouse gas emissions.

Move more quickly on climate change

With the global climate change talks coming in Paris, commitments so far won't be enough to reach the target of keeping the world's temperature increase to 2 degrees C (3.6 degrees F), it said.

"As the largest source of global greenhouse-gas emissions, the energy sector must be at the heart of global action to tackle climate change," said IEA executive director Fatih Birol. "World leaders meeting in Paris must set a clear direction for the accelerated transformation of the global energy sector."

The IEA report finds clear signs that an energy transition is underway: renewables contributed almost half of the world's new power generation capacity in 2014 and have already become the second-largest source of electricity (after coal).,

But IEA suggests additional steps are needed to meet the target, it says, including increasing investment in renewable energy technologies to $400 billion by 2030 from $270 billion last year.