Oil market faces supply cliff edge despite US shale boom

The global oil market faces a supply cliff edge in the next decade as demand for crude rises faster than US shale production.
The International Energy Agency warned that unless more investment flows into new oil projects the market will face a supply crunch within five years.
The IEA’s findings appear to confound forecasts for a major US shale boom in the coming years which many fear could threaten the oil market price recovery.
The IEA said that US exports are likely to cover around 80pc of the world’s demand growth over the next three years – and growth from Canada, Brazil and Norway will more than cover the remaining 20pc of demand growth.
But more investment will still be needed after 2020 due to the “unprecedented” two year investment hiatus during the oil market downturn.
Oil market faces supply cliff edge despite US shale boom

Fatih Birol, executive director of the International Energy Agency

Melissa Phillip/Houston Chronicle
The oil price crash from over $100 a barrel in mid-2014 to twelve year lows under $30 in early 2016 left oil companies scrambling to drive down costs and cut their debts.
They have still not recovered enough to replace these lost years on oil investment, according to the report.
“The United States is set to put its stamp on global oil markets for the next five years,” said IEA boss Fatih Birol.
Global oil production is forecast to grow by 6.4m barrels a day to reach 107m barrels a day by 2023. Thanks to a renaissance for US frackers the country’s production will climb to nearly 17m barrels a day in five years, up from 13.2m barrels a day in 2017.
But the IEA said economic growth in Asia and a resurgent petrochemicals industry in the US will spur global oil demand higher by 6.9m barrels a day.
“As we’ve highlighted repeatedly, the weak global investment picture remains a source of concern. More investments will be needed to make up for declining oil fields – the world needs to replace 3m barrels a day of declines each year, the equivalent of the North Sea – while also meeting robust demand growth,” he added.
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