The International Energy Agency (IEA) said today that the United States would lead oil production growth at the international level in the next five years, this despite the fall in the US rig count. The American firms are nevertheless saying that they are the ones getting hit very hard with falling oil prices. However, in its yearly report on the medium-term oil market, the agency indicated that the market will start rebalancing next year though the light, tight oil (LTO) output which has dipped due to weak price environment.
Strong Growth Seen
The IEA believes that once the rebalancing kicks in next year, the oil industry in the United States could start seeing strong growth in oil production. Iran would be the next country to gain as its supply comes back to the market following the expiry of international sanctions. The agency expects the two countries to lead production increases both OPEC and non-OPEC countries by the turn of the decade.
The report also dwelt on the risk factors of an oil price spike during the latter part of the forecasted period. One of them was the insufficient investment as several oil firms would resort to closing rigs amidst reducing the costs due to weak oil prices. Oil prices have already plunged to around $33 a barrel from approximately $114 per barrel in June 2014.
Biggest Contributor To Supply Growth
According to the IEA, America remains the biggest contributor to the growth in the oil supply during the period between 2017 and 2021 representing over two-thirds of non-OPEC production gains whereas Iran would lead the OPEC pack. The IEA also said that though the production of oil in the US remained positive, the drop in supply growth coupled with spending cuts in the industry might create unpredictable moves in the prices of oil in the future.
According to the IEA forecast, about 4.1 million barrels per day of oil will be added to the international supply chain between 2015 and 2021. This was sharply down from 11 million barrels a day between 2009 and 2015. The IEA expects oil demand to reach 101.6 million barrels per day by 2021.