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Rising production of shale oil in the United States is going to help meet most of the world’s new demand for crude over the next five years, according to the International Energy Agency.
And that will be the case even if the global economy improves.
That means the mostly middle-eastern members of the OPEC oil cartel risk lowering prices if they increase output.
In its semi-annual report analysing mid-term global supply and demand trends, the IEA said shale oil is changing the production landscape.
“North America has set off a supply shock that is sending ripples throughout the world,” IEA Executive Director Maria van der Hoeven said.
“The good news is that this is helping to ease a market that was relatively tight for several years,” she added. Oil on Tuesday traded near $103 a barrel, well below its peak of $147 in 2008.
The IEA expects demand worldwide to rise eight percent by 2018 to reach 96.7 million barrels per day (bpd) based on a fairly optimistic assumption by the International Monetary Fund of three to 4.5 percent global economic growth a year during the period.
That incremental demand will be met mainly by non-OPEC production, which will rise by more than 10 percent between 2012 and 2018 to 59.31 million bpd, the IEA said.
The United States will overtake Russia as the world’s largest non-OPEC producer as early as 2015, it added.