Global oil markets are going through a period of extraordinary change, according to the International Energy Agency’s annual oil market forecast, Oil 2019.The US will drive global oil supply growth over the next 5 years thanks to the remarkable strength of its shale industry. Meanwhile, production of heavier crude grades is hamstrung by sanctions and other restraints in key producing countries. All this contributes to a transformation of global oil supplies, with critical implications for energy security and market balances throughout IEA’s forecast period to 2024. Meantime, IEA continues to see no peak in oil demand, thanks to strong growth of petrochemicals and jet fuel in the US and Asia.
The US continues to dominate supply growth in the medium term. This is happening because US shale is able to respond to price signals more swiftly than other sources of supply—in fact even more US supply could be on the way if prices rise beyond current levels. IEA forecasts that the US accounts for 70% of the total increase in global capacity to 2024, adding a total of 4 million b/d. This follows spectacular growth of 2.2 million b/d in 2018.
“The second wave of the US shale revolution is coming,” said Fatih Birol, IEA executive director. “It will see [the] US account for 70% of the rise in global oil production and some 75% of the expansion in LNG trade over the next 5 years. This will shake up international oil and gas trade flows, with profound implications for the geopolitics of energy.”