The rise in North America’s oil production will transform global markets over the next five years, the International Energy Administration (IEA) said in a yearly report published on Tuesday.
“The supply shock created by a surge in North American oil production will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15 years,” the IEA said in its annual Medium-Term Oil Market Report (MTOMR).
The report forecast that North America, led by the United States and Canada, would see its oil production rise by 3.9 million barrels per day (mb/d) from 2012 to 2018. This will constitute more than half of the non-OPEC growth in oil production, the report stated.
“North America has set off a supply shock that is sending ripples throughout the world,” IEA Executive Director Maria van der Hoeven said at an industry event where the report was launched on Tuesday.
He added: “The good news is that this is helping to ease a market that was relatively tight for several years. The technology that unlocked the bonanza in places like North Dakota can and will be applied elsewhere, potentially leading to a broad reassessment of reserves. But as companies rethink their strategies, and as emerging economies become the leading players in the refining and demand sectors, not everyone will be a winner.”
Indeed, the report forecasts that global production growth will significantly outstrip demand over the next five years, by a margin of 1.5 mb/d.
The report did note that its estimates of North American oil production were based on the assumption that the necessary investments in infrastructure would be made.
Another notable statistic in the report was the IEA’s forecast that oil demand in non-OECD countries would be larger than demand in OECD countries for the first time. Also transforming global supply chains over the next five years, according to the IEA, will be the increase in the oil refining and storage capacities of non-OECD countries.
Zachary Keck is Assistant Editor of The Diplomat.