RISING US shale oil production will help meet most of the world’s new oil demand in the next five years, even if the global economy picks up steam, leaving little room for Opec to lift output without risking lower prices, the West’s energy agency said yesterday.
The prediction by the International Energy Agency (IEA) came in its closely watched semi-annual report, which analyses mid-term global oil supply and demand trends.
“North America has set off a supply shock that is sending ripples throughout the world,” IEA executive director Maria van der Hoeven said.
“The good news is that this is helping to ease a market that was relatively tight for several years,” she added. Oil traded near $103 a barrel yesterday, well below its peak of $147 in 2008.
The IEA said it expected global demand to rise eight per cent on aggregate between 2012 and 2018 to reach 96.7m barrels per day (bpd) based on a fairly optimistic assumption by the International Monetary Fund of three to 4.5 per cent annual global growth .
That incremental demand will be met mainly by non-Opec production, which will rise by more than 10 per cent between 2012 and 2018 to 59.31m bpd, the IEA said, increasing its estimate of non-Opec supply in 2017 by 1m bpd versus its previous report in October 2012.
The US will overtake Russia as the world’s largest non-Opec producer as early as 2015, the IEA said.
That may leave Opec, which had been long seen as the last resort to meet rising demand, with output fluctuating around the current levels of 30m bpd for the next five years.
The agency cut its estimate of the demand for Opec crude in 2017 to 29.99m bpd, down by 1.22m bpd from its previous report.
City A.M. Reporter