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IEA: US oil causing ‘ripple effect’ US production combined with non-OECD demand could drastically change the global supply chain by 2018, according to the agency Eric Lidji For Petroleum News
The rise of North American oil supplies is an even bigger deal than you thought.
The growth in domestic oil supplies from unconventional sources may be well known, but several technical and political factors are compounding its influence, according to a five-year outlook on the global oil market from the International Energy Agency.
“While continued uncertainties remain about the economics and ultimate impact of unconventional production technologies, recent developments in North American supply stand out as an overarching driver, coloring the way in which virtually all other factors impact the market, and causing ripple effects through all aspects of the oil industry, from supply to demand and all the links in between,” the international statistical and analysis group wrote in its Medium-Term Oil Market Report-2013, released on May 14.
Because this supply growth is coming from the industrialized world, it is backing out traditional supplies from the Middle East and Africa. Because the IEA expects existing U.S. export restrictions to remain in place through the forecast period, its report expects the direct influence of North American supplies to be constrained between now and 2018.
But over the same period, the IEA expects the developing world to become the most important customer of the oil industry. The rising demand from countries outside the OECD will come not only from consumers in those growing economies, but also from storage and “mega-refineries,” which are already influencing the global supply chain.
Because this growth comes as European economies are sluggish and North American economies are transitioning to natural gas, the IEA expects the developing world to overtake developed economies in oil demand as soon as this quarter, and keep growing.
OPEC still essential The report still expects OPEC to play an “essential part in the global supply mix,” but the political unrest in the Middle East and North Africa favors North American supplies.
Still, seeing as how the growth in domestic oil production is largely a technical feat, the IEA also expects unconventional oil production to start expanding in the next five years, as companies look to apply the combination of hydraulic fracturing and horizontal drilling in oil provinces from Latin America, to Saudi Arabia, to China and Russia. “Although uncertainties remain, it is impossible to ignore the possibility that current non-conventional technologies, as they spread and get both perfected and mainstreamed, could lead to a wholesale reassessment of global reserves,” the IEA wrote in its report.
The Medium-Term Oil Market Report examines how all aspects of the global oil market might progress over the next five years. The International Energy Agency produces similar reports on natural gas, coal and renewable energy, as well as energy efficiency.
The IEA released the report just seven months after its most recent oil forecast, an attempt to align the release of the oil, gas and renewable energy reports to make it easier to compare gross domestic product and other assumptions between one and the other.
The next report is due May 2014.
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