World’s oil suppliers in for a shock: IEA

The balance of power is changing, with respect to the world’s oil and gas resources, and a phenomenon being called “supply shock” is working its way through the industry. North America is the main drivers, with its booming oil production driven by the shale energy revolution and by Canada’s oil sands. The International Energy Agency (IEA) says that the boom in new supply will be as transformative for the world energy industry over the next five years as the rise of Chinese demand has been over the past fifteen.

crude-oil-imports-north-america-IEA-OPEC-EDIWeekly
North America’s imports of crude oil are forecast to plunge over the next five years, while exports will surge, causing a worldwide “supply shock” that will have far-reaching effects on the global economy, according to the International Energy Agency. Chart from IEA.

The IEA forecast last year that the United States could become the world’s biggest oil producer, thanks to shale. North American output is expected to grow by 3.9 million barrels per day by 2018. This would be equal to nearly two-thirds of all non-OPEC supply growth, projected at 6 million barrels per day.

OPEC capacity currently accounts for 35 per cent of global oil output, and is expected to increase to 36.75 million barrels per day by 2018.

The North American growth, however, could come at the expense of the OPEC member producers. Faster than anticipated growth in US production, mainly from shale plays, has diminished US demand for OPEC oil. What’s more, growing exports from the US could further weaken OPEC’s position of dominance in the energy industry. The IEA expects demand for OPEC oil to fall below 30 million barrels per day in a trend that could continue until 2018.

Canadian production is also expected to surge, though the IEA is concerned that current pipeline capacity will not support greater production volumes. Canada’s production is forecast to rise from 3.7 million barrels per day now to 5 million barrels per day by 2018.

Without a coordinated effort to control production by the OPEC producers, oil prices could crash, according to some analysts.

“There is hardly any aspect of the global oil supply chain that will not undergo some measure of transformation over the next five years, with significant consequences for the global economy and oil security,” the IEA said.

Did you miss this?

Other Popular Stories

  • Canadian company to provide modular housing for refugees in Sweden
  • Study of Ontario power needs finds nuclear is best option
  • SNC-Lavalin wins large Paris metro contract
  • SpaceX-1 Launches Falcon 9
  • SPPCA's new landing gear facility opening in Mississauga
  • Canada exports more than logs and oil
  • Natural resources, manufacturing show stronger than expected growth in February
  • Bill Gates betting we can invent our way to a clean energy world
  • Goodbye NAFTA, Hello USMCA trade deal: it's not all in the name — Canadian dollar soars, stocks rise; autos win, dairy loses
  • Trucking industry moving toward use of EOBRs
  • Siemens gives Western U engineering huge PLM software grant
  • Aerogel, 99.8 percent air — a solid so light it challenges design engineers to find an application
  • Outperforming auto sector leads manufacturing "resurgence"
  • Government pledges continued support as National Mining Week begins
  • Pratt & Whitney Canada to invest $1 billion in engine development
  • Irving Oil to build new marine terminal in NB to handle new crude from Alberta
  • The challenges of 3D printing or manufacturing in space — without gravity to help it all "stick"
  • Stronger concrete made from recycled tires developed by UBC Engineers: could help reduce carbon footprint of 3 billion tires-a-year
  • SpaceX "first orbital class rocket capable of reflight" test flight today: $12 billion in contracts and a 100 missions at stake: live feed of launch
  • National Energy Board not doing enough to ensure pipeline safety: report
Scroll to Top