Oil production growth from the United States will be the most important contributor to a river of crude that will more than satisfy global demand through 2020, according to a new report from the International Energy Agency (IEA). The organization mentions one caveat: exploration and development investment by the industry will need to be robust from the United States and several other nations to keep supplies high enough to meet demand through 2023.
The deal struck between the members of OPEC and 11 partners, including Russia, to cut 1.8 million barrels per day of crude oil production has had its intended effect of drawing down global stockpiles and lifting prices. The unintended effect was to make U.S. production from its shale plays profitable again.
Global oil demand is forecast to rise from 97.8 million barrels a day currently to 104.7 million by 2023, with China remaining as the principal driver of growth. Global oil production is forecast to reach 107 million barrels a day by 2023.
U.S. crude oil output rose sharply last year and the IEA forecasts growth of a further 2.7 million barrels by 2023 to bring the U.S. total to 12.1 million barrels a day. Adding in some 4.7 million barrels a day of other liquids, U.S. liquids production is expected to total nearly 17 million barrels a day. IEA executive director Fatih Birol said, “The United States is set to put its stamp on global oil markets for the next five years.”
OPEC output growth is estimated to rise by only 750,000 barrels a day by 2023 due to massive declines in Venezuelan supply that are expected to more than offset Iraqi production gains. Essentially all the forecast gains in OPEC production will come from the cartel’s Middle East members.
Birol also noted:
[A]s 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 [million barrels a day] of declines each year, the equivalent of the North Sea – while also meeting robust demand growth.
Production gains from U.S. shale plays plus higher production from Canada, Brazil and Norway will be able to keep up with demand growth through 2020, with little to no help from OPEC or Russia. Without more investment outside the United States — and soon — keeping up with growing demand by 2023 could be difficult.
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
