Rising oil production worldwide may further outstrip demand in 2018, according to the latest figures from the International Energy Agency.
The global economy is slowly recovering from historically high imbalances thanks to efforts by OPEC to limit production however the IEA highlighted that this trend may not continue for long.
“With the surplus having shrunk so dramatically, the success of the output agreement might be close to hand,” the IEA stated but added that its “main message” was that “fast-rising production in non-OPEC countries, led by the U.S., is likely to grow more than demand.”
If correct the output growth could wreak havoc with international markets, which are only recovering now as oil-index-linked industries recover, having been decimated by a lack of investor confidence in recent years as oil price plummeted.
The Paris-based agency predicts that oil demand growth in 2018 will reach 1.4 million barrels per day, up from a previous projection of 1.3 million bpd, following revised economic growth forecasts from the International Monetary Fund.
“Today, having cut costs dramatically, U.S. producers are enjoying a second wave of growth so extraordinary that in 2018 their increase in liquids production could equal global demand growth,” the IEA said.
The growth is still low compared with last year when demand grew at a rate of 1.6 million bpd in 2017, the IEA said in its monthly market report.
“In just three months to November, (U.S.) crude output increased by a colossal 846,000 bpd and will soon overtake that of Saudi Arabia. By the end of this year, it might also overtake Russia to become the global leader.”