The U.S. shale boom will send “shockwaves” through the global oil trade over the next five years, benefiting the nation’s refiners and displacing OPEC as the driver of supply growth, the IEA said.
North America will provide 40 percent of new supplies to 2018 through the development of light, tight oil and oil sands, while the contribution from the Organization of Petroleum Exporting Countries (OPEC) will slip to 30 percent, according to the International Energy Agency.
The IEA trimmed global fuel demand estimates for the next four years, and predicted that consumption in emerging economies may overtake developed nations this year.
“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,” the Paris-based adviser to 28 oil-consuming nations said in its medium-term market report Tuesday.
The development of U.S. shale resources, enabling the nation’s highest level of energy independence in two decades, is creating a “chain reaction” in the global transportation, processing and storage of oil that may escalate as other countries try to replicate the American oil boom, according to the IEA. Crude futures for settlement in 2018 are trading at a discount to current prices, signaling expectations for increasing supplies and constrained demand.
Brent crude for settlement in 2017 is about $12 a barrel cheaper than front-month prices on the ICE Futures Europe exchange. June contracts were near $102.60 Tuesday, while futures for December 2017 were at $90.39 a barrel.
Global oil demand will increase by 6.1 million barrels a day, or 6.7 percent, to 96.7 million a day by 2018 as the economic recovery gathers pace, the IEA said.
Demand estimates for 2017 are about 95,000 barrels a day less than forecast in the agency’s previous report, as weaker-than-expected growth this year crimps subsequent annual totals.