According to the International Energy Agency, over the next five years, global oil supply would be driven by the United States which is expected to add about 4 million barrels per day to the current output.
The Paris-based agency said that by 2024, the total oil output of US – which includes natural gas liquids (NGLs) and other hydrocarbons, would touch 19.6 million bpd compared to 15.5 million bpd produced last year. There would also be doubling of gross crude exports which would lead to severe competition in the market especially in the Asian market.
The IEA said in 2024, the total crude output in the United States will touch 13.7 million bpd which would be about almost 2.8 million bpd than the just under 11 million bpd produced in 2018.
The IEA also predicted that there would be demand pressures for crude from the Organization of the Petroleum Exporting Countries because of increasing supplies from the US and other oil manufacturing countries. However no peaking yet of global demand for crude is seen by the IEA which is good news for producers.
“The United States is increasingly leading the expansion in global oil supplies, with significant growth also seen among other non-OPEC producers, including Brazil, Norway and new producer Guyana,” the IEA, an adviser to the United States and other industrialized countries, said in its five-year outlook.
The efforts of OPEC and its partners led by Russia to reduce supply of crude in the global market have been upended by an increase in U.S. oil supply because of its shale boom. The so-called OPEC+ group began a new round of oil supply cuts in 2019 to support prices.
The IEA said that by 2024, the export of crude from US would get past Russian supply and would almost be the same as that of Saudi Arabia by 2024. That would diversify global supplies, said the IEA.
“The United States emerges as a significant oil exporter,” said Fatih Birol, IEA executive director, during a press conference at an industry summit in Houston. “The second wave of shale production growth is coming.”
The slowing down of China would ease the global demand in crude. Despite this, there would be an annual growth in demand of an average of 1.2 million bpd by 2024.
According to the IEA, currently there is little chance of a cap being put in global demand of oil because of moves like the greater adoption of electric cars. According to a previous report by Goldman Sachs, there can be peaking of global demand by 2024.
“The IEA continues to see no peak in oil demand, as petrochemicals and jet fuel remain the key drivers of growth, particularly in the United States and Asia, more than offsetting a slowdown in gasoline due to efficiency gains and electric cars,” the IEA said.
“Market management by producers is likely to remain necessary for some time given the outlook for the call on OPEC crude,” the report said.
(Adapted from Reuters.com)