LONDON – The United States is on track to become a net petroleum exporter by 2021 and will soon after surpass Russia and rival Saudi Arabia, currently the world’s largest oil exporter, the International Energy Agency said on Monday.
The US is expected to double its gross crude oil exports to 4.2 million barrels a day by 2024, while total exports of crude and refined products should reach 9 million barrels a day, the IEA said in its annual five-year oil outlook report.
US crude production, driven by relentless growth in shale oil, is expected to account for 70 percent of the total increase in global production capacity over the next five years, the agency added. The report also said the US should account for 75 percent of the expansion in liquefied natural gas trade.
“The second wave of the US shale revolution is coming,” said IEA Executive Director Fatih Birol. “This will shake up international oil and gas trade flows, with profound implications for the geopolitics of energy.”
The use of hydraulic fracturing in the US to drill for oil in shale rock, a process known as fracking, has dramatically reshaped the global oil industry over the past decade. It has allowed the US to rival traditional producers like Russia and Saudi Arabia, the de facto head of the Organization of the Petroleum Exporting Countries, for market share.
Shale was largely behind the glut of American oil that flooded the market more than four years ago, leading oil prices to fall to $30 a barrel from more than a $100 a barrel in late 2014.
US shale production in 2018 grew faster than it did during the boom years of 2011 to 2014, the IEA said last year.
The US last year surpassed Russia and Saudi Arabia to become the world’s largest producer of crude oil, with output currently hovering around 12 million barrels a day.
US crude production is expected to rise to 13.7 million barrels a day by the end of its five-year forecast period, the IEA said Monday.
“Annual gains will boost the US to levels never seen in any country, in excess of maximum capacity in both Russia and Saudi Arabia,” the report noted.
OPEC’s production capacity is expected to fall by around 400,000 barrels a day in the run up to 2024, in part as a result of supply outages in Iran and Venezuela, the agency said. The oil industries of both countries are under US sanctions.
OPEC’s 14 member-nations and a group of 10 producers outside the cartel led by Russia, agreed in late 2018 to hold back crude output by a collective 1.2 million barrels a day for the first half of 2019. The coordinated cuts have helped to rebalance an oversupplied market that had caused prices to plunge by roughly 40 percent in the fourth quarter of last year, the IEA said.
“However, robust non-OPEC production growth in the early part of the forecast period suggests that some form of market management might stay in place,” the agency added.
Oil prices have climbed by around 20 percent since the start of 2019 on the back of the OPEC-led cuts.
On Monday morning, Brent crude, the global oil benchmark, traded up 0.8 percent at $66.28 a barrel on London’s New York Mercantile Exchange. West Texas Intermediate futures, the US oil standard, were up 0.7 percent at $6.48 a barrel on the New York Mercantile Exchange.
The IEA said it expects the world’s appetite for oil to grow at an average annual rate of 1.2 million barrels a day up to 2024, reaching 106.4 million barrels a day, compared with 99.2 million barrels a day in 2018.