Globally, the price of oil rose about 6 percent to $34.70 per barrel after reaching a 13-year record low of $28.88 barrel in January, said the International Energy Agency (IEA) in its annual Medium-Term Oil Market Report (MTOMR) released yesterday.

Following a surge in the price of oil, the United States energy stock increased alongside the stocks of mining and chemical companies. The same can be said in Europe and Asia where indexes rose as well.

The price of oil has been in recovery mode since last week after Saudi Arabia and other allies agreed with non-OPEC member, Russia, to freeze oil output at January’s highs. The IEA Executive Director, Fatih Birol, noted that present oil market conditions do not suggest that prices can recover sharply in the immediate future but expects prices to start recovering in 2017 and maybe double to about $80 per barrel temporarily. However, this will be tempered by increases in energy-use efficiency and the development of renewable energy sources.

The United States is expected to see a modest drop in shale production; a loss of about 600,000 barrels per day this year, before output eventually rises again as prices get back to $50 or $60 per barrel. However, the IEA does not expect demand to surge more rapidly than that in the near term. On one hand, this can be attributed to the global economic slowdown particularly in China and partly because many developing countries (with rising demand) are expected to take steps to reduce fuel subsidies and adhere to the Paris Climate Accord.

The IEA expects a 17 percent drop in oil exploration and production this year. This implies that budget-strained countries like Nigeria, Venezuela, and Algeria will see a particular crunch as lack of investment could lead to supply shocks and a further rise in the global price of oil.