Over the next few years, any rise in global demand will be filled by Canada and the U.S
RIYADH, Saudi Arabia/ Troy Media/ – At 11 million barrels of crude per day, the United States is now the world’s top crude producer.
That amount surpasses both Russia’ daily output of 10.53 million bpd and Saudi Arabia’s 9.45 million bpd, according to Bloomberg citing the Energy Intelligence Group.
The U.S. had already been declared the world’s largest natural gas producer in 2010. Now, courtesy the increase in output growth in North America, Canada and the U.S. – not OPEC – are now set to meet any rise in global demand over the next few years.
Last month, the Paris-based International Energy Agency (IEA) also conceded that the U.S. was now the biggest producer of oil and natural gas liquids.
That situation is set to persist for some time. “It’s very likely the U.S. stays as No. 1 producer for the rest of the year” as its output is set to increase (further) in the second half, according to Francisco Blanch, head of commodities research at the Bank of America Corp. Production growth outside the U.S. has been lower than the bank anticipated, keeping global oil prices high, he added.
U.S. crude oil production has been rising steadily since 2008. Next year it is likely to hit its highest level since 1972. U.S. output has jumped from five million barrels per day in 2008 to 7.4 million bpd last year and is expected to average 8.5 million this year and 9.3 million next year, according to the Energy Information Administration (EIA), the analytical arm of the U.S. Department of Energy.
This boom, along with a rise in natural gas liquids production, has dramatically lowered U.S. imports and reduced its dependence on oil producers. The share of U.S. liquid fuels consumption filled by net imports decreased from 60 per cent in 2005 to 33 per cent in 2013 and is now expected to fall significantly further, to 22 per cent in 2015 – its lowest level since 1970.
Significant investment in the energy sector has helped spur the domestic U.S. output. Annual investment in oil and gas in the country has reached a record $200 billion, or some 20 per cent of the country’s total private fixed-structure spending, for the first time, according to Blanch.
The erosion of OPEC’s market share by the U.S. shale oil boom is also likely to continue the IEA said in a recent report, with demand for OPEC crude edging down to 29.8 million bpd in 2015 from 29.9 million this year, already slightly below the 30 million bpd level pumped by the group in June.
The IEA expects global oil demand to grow by 1.4 million barrels per day next year, up from 1.2 million this year, with most of it would being met by non-OPEC supply growth. “The U.S. and Canada remain the mainstays for growth, but sources are expected to be more diverse than in 2014,” it reported.
In view of the growing U.S supplies, OPEC also is cutting its forecasted demand for its own oil by 300,000 barrels a day next year. Demand for crude from the 12 OPEC members should remain at an estimated 29.7 million bpd through 2014, but drop to 29.4 million bpd in 2015, OPEC underlined.
OPEC also admitted that supplies from non-OPEC producers is expected to grow by 1.3 million bpd to 57 million bpd in 2015, at a time when the global demand for crude is estimated to be 92.3 million bpd, up by 1.2 million bpd from 2014. Demand growth would thus have to be met by non-OPEC output growth, OPEC’s monthly report conceded. The slowing Chinese economy is also going to impact the demand growth.
The crude world has changed – at least for the short to medium term. In the long term, other issues will continuing to plague the crude outlook. Will crude continue to play its historical role as the dominant source in the global energy mix?
How this question is answered will have a severe impact on the future of geopolitics.