The US will drive global oil supply growth over the next five years as a result of its flourishing shale industry.
According to the International Energy Agency's (IEA) annual oil market forecast, the strength of its shale industry in the coming years will trigger a rapid transformation of world oil markets.
By the end of the forecast, oil exports from the US will overtake Russia and close in on Saudi Arabia, bringing greater diversity of supply.
While global oil demand growth is set to slow down, it will still increase at an annual average of 1.2 mb/d to 2024, according to the Oil 2019 report. The organisation says that it still continues to see no peak in oil demand, as petrochemicals and get fuel remain the key drivers of growth, particularly in the US and Asia. This will offset a slowdown in gasoline due to the growth of electric cars and efficiency gains.
The IEA says: 'Global oil markets are going through a period of extraordinary change, with long-lasting implications on energy security and market balances throughout our forecast period to 2024. The US is increasingly leading the expansion in global oil supplies, with significant growth also seen among other non-OPEC producers, including Brazil, Norway and Guyana.'
The US' ability to transform itself into a major exporter is due to the ability of the US shale industry to respond quickly to price signals by ramping up production. The US accounts for 70% of the total increase in global capacity to 2024, adding a total of 4 mb/d, which follows growth of 2.2 mb/d in 2018.
Iraq reinforces its position as one of the world's top producers, and as the world's third-largest source of new supply, it also drives growth within OPEC to 2024.
Dr Fatih Birol, the IEA's executive director, says: 'The second wave of the US shale revolution is coming. 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 five years. This will shake up international oil and gas trade flows, with profound implications for the geopolitics of energy.'
Looking to the upstream sector, the IEA says that investment is set to rise in 2019. Preliminary investment plans by major international oil companies indicate that upstream investment will rise in 2019 for the third straight year. For the first time since the 2015 downturn, investment in conventional assets could increase faster than for the shale industry.
Dr Birol adds: 'These are extraordinary times for the oil industry as geopolitics become a bigger factor in the markets and the global economy is slowing down. Everywhere we look, new actors are emerging, and past certainties are fading. This is the case in both the upstream and the downstream sector. And it's particularly true for the US, by far the stand-out champion of global supply growth.'
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