The United States is set to take over the throne as the world’s largest oil producer in the next five years, overpowering OPEC countries.
Over the next three years, gains from the United States alone will cover 80 pct of the world’s demand growth, with Canada, Brazil and Norway – all IEA family members – able to cover the rest, according to Oil 2018, the IEA’s five-year market analysis and forecast.
The U.S. supply growth story has been enabled by the country’s upstream investments over the past couple of years which have otherwise remained at historic two-year low seen in 2015-2016 in other regions.
Hence, IEA insists that more investment will be needed to boost output across the board to spur supply growth after 2020.
Global oil demand growth remains healthy driven by developing countries in Asia, even as oil consumption growth slows down in China thanks to new environmental policies designed to curb air pollution. Strong growth in petrochemicals demand globally is another key area of growth, the report indicates.
“The United States is set to put its stamp on global oil markets for the next five years,” said Dr. Fatih Birol, the IEA’s Executive Director.
“But as we’ve highlighted repeatedly, the weak global investment picture remains a source of concern. More investments will be needed to make up for declining oil fields – the world needs to replace 3 mb/d of declines each year, the equivalent of the North Sea – while also meeting robust demand growth.”
Virtually all of the OPEC output growth comes from the Middle East. In Venezuela, oil production has fallen by more than half in the past 20 years, and declines are set to accelerate.
Sharply falling production in Venezuela will offset gains in Iraq, resulting in OPEC crude oil capacity growth of just 750,000 barrels a day by 2023. Unless there is a change to the fundamentals, the effective global spare capacity cushion will fall to only 2.2% of demand by 2023, the lowest number since 2007, the report adds.
According to IEA, global oil production capacity is forecast to grow by 6.4 mb/d to reach 107 mb/d by 2023. Thanks to the shale revolution, the United States leads the picture, with total liquids production reaching nearly 17 mb/d in 2023, up from 13.2 mb/d in 2017. Growth is led by the Permian Basin, where the output is expected to double by 2023.
As a result of new investments in pipelines and other infrastructure that ease the current bottlenecks, US crude export capacity is forecast to reach nearly 5 mb/d by 2020 with Corpus Christi solidifying its position as the primary North American crude-oil outlet.