Increasing oil production from the United States is set to buoy the global oil demand through 2020. However, the International Energy Agency (IEA) has warned that more investment will be required to improve the supplies after that.
According to the five-year oil market forecast of the IEA, the increasing output from the United States of America alone will already cover 80 percent of the demand growth of the world over the next two years.
US production is estimated to grow by 3.7m barrels per day (bpd) over the next five years as the producers take advantage of higher oil prices, which were improved by a landmark deal between the Organisation of Petroleum Exporting Countries (Opec) and non-Opec countries to control output in order to reduce the global oversupply.
However, despite the increasing prices, the IEA noted that the oil industry still needs to recover from the “unprecedented” two-year decrease in investment after the oil price crashing in mid-2014.
The IEA is based in Paris. The agency observed little to no increase in the spending on exploration outside the United States in 2017 and 2018 and warned that additional investment would be required to drive supply growth after 2020.
The executive director of the IEA, Fatih Birol, stated: “The United States is set to put its stamp on global oil markets for the next five years.
“But 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 bpd of declines each year, the equivalent of the North Sea – while also meeting robust demand growth.”
The IEA expects that global demand for oil will increase by 6.9m bpd by 2023 to 104.7m bpd, with China pushing the growth of the demand.