By Amanda Cooper
LONDON (Reuters) – The world’s biggest oil and gas producers are under unprecedented pressure to cut their reliance on energy revenues, as advances in fuel efficiencies and electric vehicles threaten to undercut demand and erode their finances, the International Energy Agency said on Thursday.
It warned that inaction or unsuccessful efforts to diversify sources of income would compound the risks facing both producer economies and global markets.
“More than at any other point in recent history, I believe there needs to be fundamental change in the development models of those countries,” IEA director Fatih Birol said.
Structural factors such as the boom in U.S. shale oil production, which is taking market share from rivals such as Saudi Arabia or Nigeria on the supply side, and efforts to reduce fossil fuel use to slow climate change on the demand side, are already putting oil producers’ budgets under pressure.