United States is in a strong position to overtake countries such as Saudi Arabia and Russia as the world’s leading energy producer over the next 12 months, according to the latest monthly report from the International Energy Agency (IEA,)
“This year promises to be a record-setting one for the U.S.,”IEA said in its closely-watched report published Friday.
The report from the IEA came at a time when crude futures have climbed to highs not seen since the early days of a slump in December 2014. Brent crude futures hit a peak of $70.37 a barrel on Monday, with the global benchmark since paring some of its recent gains to trade at $68.69 on Friday morning.
According to a statement by Neil Atkinson, head of oil industry and markets division at the IEA, “what we are trying to understand is the responsiveness of the U.S. shale producers. And because of the dynamism of the industry, the innovation and the vast number of players in that space … to some extent, we are in unchartered waters.”
Atkinson also said that given the recent rally in oil prices, the IEA was expecting a “wave of new production” from the U.S. in the coming months. He added that OPEC would then need to “accommodate” for that and make its own judgment at its next meeting in June as to what its response should be.
U.S. crude production stands at 9.9 million barrels a day, according to the IEA, which is the country’s highest level in almost 50 years. That level of supply puts the U.S. neck and neck with Saudi Arabia the world’s second-largest producer after Russia.
In recent years, America’s unprecedented oil and gas boom has been driven by one factor, and that’s shale. The shale revolution could help to alleviate U.S. reliance on foreign oil, while also supporting a bid to export to more countries around the world.
The IEA’s estimates of global oil product demand in 2017 and 2018 were left unchanged at 97.8 million barrels a day and 99.1 million barrels a day, respectively.