Printer Friendly

US oil boom leaves Opec sidelined.

Rising US shale oil production will help meet most of the world's new oil demand in the next five years, even if the global economy picks up steam, leaving little room for the Organization of the Petroleum Exporting Countries (Opec) to lift output without risking lower prices, the West's energy agency said.

The prediction by the International Energy Agency (IEA) came in its closely watched semi-annual report, which analyses mid-term global oil supply and demand trends.

"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 traded near $103 a barrel, well below its peak of $147 in 2008.

The IEA said it expected global demand to rise 8 percent on aggregate between 2012 and 2018 to reach 96.7 million barrels per day (mbpd) based on a fairly optimistic assumption by the International Monetary Fund (IMF) of 3 to 4.5 per cent 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 per cent between 2012 and 2018 to 59.31 mbpd, the IEA said, increasing its estimate of non-Opec supply in 2017 by 1 mbpd versus its previous report in October 2012.

The US will overtake Russia as the world's largest non-Opec producer by 2015, the IEA said. That may leave Opec, which had been long seen as the last resort for the world to meet rising demand, with output fluctuating around the levels of 30 mbpd for the next five years.

The agency cut its estimate of the demand for Opec crude in 2017 to 29.99 mbpd, down by 1.22 mbpd from its previous report six months ago. It said Opec's spare capacity will rise by over a quarter to reach 6.4 mbpd or 6.6 per cent of global demand, giving an additional cushion to potential supply shocks, the report said.

The adoption of US shale technology could help Russia and China boost production from unconventional reserves, but new projects may slow in other areas.

"Several members of the (Opec) producer group face new hurdles, notably in North and sub-Saharan Africa. The regional fallout from the 'Arab Spring' is taking a toll on investment and capacity growth," the IEA said.

"Downward adjustments across the (Opec) group are partly offset by substantially stronger growth in Saudi capacity than previously expected, reflecting newly announced development projects," it added.

Iran's sustainable crude production capacity is likely to fall by as much as 1 mbpd to 2.38 mbpd by 2018, the lowest in many decades, due to Western sanctions, the IEA said.

The IEA said the balance of global supply growth, until recently evenly split between Opec and non-Opec, was tilting towards the latter.

Copyright 2012 www.tradearabia.com

Copyright 2013 Al Hilal Publishing & Marketing Group

Provided by Syndigate.info an Albawaba.com company
COPYRIGHT 2013 Al Bawaba (Middle East) Ltd.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2013 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Oil & Gas News
Date:May 20, 2013
Words:509
Previous Article:COMPANY NEWS: Bahri wins 'Global Perform Award'.
Next Article:Mideast's 'dilemma' over oil.
Topics:

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters