The explosive development of the shale production in the U.S. will send shockwaves on the world of oil market in the next five years, favoring American refineries while OPEC will not be the main driver of supply growth, according to the International Energy Agency (IEA).
“North America has set off a supply shock that is sending ripples throughout the world,” said Maria van der Hoeven, IEA executive director. The extra oil supply will be provided 40% by North America in the next five years, while OPEC’s contribution to this increase will drop to 30%, IEA predicts. The agency reduced its estimates for global fuel demand for the next four years, and predicts that this year consumption in emerging economies will exceed that of developed countries.
“Escalating security risks, political instability and unattractive fiscal regimes in a number of OPEC member countries are expected to take a toll on OPEC production capacity growth,” said an IEA report.
The shale oil deposits in the U.S., giving the country the highest level of energy independence in the last two decades, are creating a chain reaction in the transportation, processing and storage of oil, which could escalate as other states try to imitate this model, according to the IEA.
The crude oil futures for 2018 are cheaper than current prices, indicating expectations of increased supply and low demand. Brent crude delivery for 2017 is about $12 cheaper than the one-month contracts at the ICE Futures Europe exchange. The price of Brent crude for delivery in June is about $102.6 per barrel, while the contract quotation for delivering in December 2017 is $90.39 per barrel.
The global demand for oil will increase by 6.1 million barrels per day, or 6.7%, to 96.7 million barrels per day by 2018, with the expected economic recovery. But the estimate is lower than the IEA prediction in the previous report.
The IEA report states that OPEC’s spare crude oil capacity will increase by 25 percent in the next couple of years to a peak of 7.18 million barrels a day by 2015 compared to 5.76 million a day this year.
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