The International Energy Agency (IEA) has released its annual Medium-Term Oil Market Report (MTOMR), which says the increase in oil production in North America will affect global oil supplies, helping ease demand. The primary new sources of oil in the U.S. are light tight oil (LTO, oil from shale or tight sandstone formations) and oil sands in Canada.
“North America has set off a supply shock that is sending ripples throughout the world,” said IEA Executive Director Maria van der Hoeven, who launched the report at the Platts Crude Oil Summit in London. “The good news is that this is helping to ease a market that was relatively tight for several years. The technology that unlocked the bonanza in places like North Dakota can and will be applied elsewhere, potentially leading to a broad reassessment of reserves. But as companies rethink their strategies, and as emerging economies become the leading players in the refining and demand sectors, not everyone will be a winner.”
The IEA’s MTOMR forecasts that North American supply will grow by 3.9 million barrels per day between 2012 and 2018, which is nearly two-thirds of the total growth forecast for non-OPEC countries. Global oil refining capacity is set to increase by 9.5 million barrels per day during this period, mainly in China and the Middle East, according to IEA.
In terms of global production, the MTOMR says oil from OPEC countries will be negatively affected by security issues in North and Sub-Saharan Africa. Iraq, Saudi Arabia, and the United Arab Emirates will lead in terms of growth, IEA stated, but reduced aggregate increases in global oil capacity from OPEC nations will increase the market share of oil from North American sources.