May 14--The rapid growth of U.S. oil production is transforming global markets
and easing supplies just as China and the rest of the developing world move to
overtake the U.S. and the developed world for the first time in the consumption
of oil, the International Energy Agency reported Tuesday.
The shale oil revolution in the U.S. heartland will cause a surge in oil production of 3.9 million barrels a day in the next five years, the IEA said, far exceeding the growth of OPEC and other oil suppliers, eliminating the need for Middle Eastern imports in the U.S. and causing other cascading effects.
"North America has set off a supply shock that is sending ripples throughout the world," said IEA Executive Director Maria van der Hoeven. "The good news is that this is helping to ease a market that was relatively tight for several years."
Besides displacing Middle Eastern oil imports so they can be redirected toward Asia, which is the fastest growing center of demand, the hydraulic fracturing -- or "fracking" -- technologies used to release the oil from shale rock in the U.S. have the potential to transform the way oil is produced around the world and could lead to a major reassessment of the world's oil resources, she said.
The growth of oil supply from the U.S. and Canada, which is ratcheting up development of its vast Alberta oil sands, couldn't come at a better time as the developing world is set to surpass the developed world in the consumption of oil for the first time this quarter, the agency said.
China has been the biggest and most dramatic source of new demand for oil in the last 15 years, but the use of oil is also growing briskly in the rest of Asia, the Middle East and Africa, areas which are enjoying robust economic growth. At one time only a decade or so ago, the U.S., Europe and Japan were the dominant sources of world oil demand.
Even as supplies surge in North America, production by the OPEC group of oil producers has grown only weakly, hobbled by unrest in the Middle East and North Africa stemming from the Arab Spring uprisings, the agency said. Iraq is leading the growth in OPEC production, but it continues to encounter obstacles that slow the development of its vast oil reserves.
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