U.S. Will Be the World’s Largest Oil Producer by 2023: IEA Report
The U.S. is likely to surpass Russia to become the world’s largest oil producer by 2023, accounting for most of the global growth in petroleum supplies, International Energy Agency said Monday.
According to this latest report, “this year promises to be a record-setting one for the US,” with the potential of surpassing the output of Saudi Arabia and Russia.
The rapid increase in U.S. production is due in large part to the booming shale industry. The IEA’s report suggests that U.S. crude production could exceed 10 million barrels a day this year, raising its outlook by 260,000 barrels a day.
Yet this boom in production is also a direct beneficiary of cuts to OPEC and Russian production. Starting in January of last year and due to continuing throughout 2018, OPEC and 10 other producers agreed to production cuts to overcome a glut and push up prices.
Oil production growth from the United States, Brazil, Canada and Norway can keep the world well supplied, more than meeting global oil demand growth through 2020, but more investment will be needed to boost output after that, the report said.
Over the next three years, gains from the United States alone will cover 80% of the world’s demand growth, with Canada, Brazil, and Norway – all IEA family members – able to cover the rest, according to Oil 2018, the IEA’s five-year market analysis and forecast.
But the report finds that despite falling costs, additional investment will be needed to spur supply growth after 2020. The oil industry has yet to recover from an unprecedented two-year drop in investment in 2015-2016, and the IEA sees a little-to-no increase in upstream spending outside of the United States in 2017 and 2018.
Oil 2018 also examines a variety of other topics including crude quality issues arising from the rapid increase in US production, changing trade flows and a growing global refining capacity surplus. Global oil trade routes are moving east, as China and India replace the United States as top oil importers. With seaborne oil travelling longer distances, energy security, one of the IEA’s core missions, will remain as critical as ever.
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