The U.S is like to take over the top spot from Russia as the world’s largest oil producer by 2023 according to the International Energy Agency. The industry watchdog announced the estimate during an energy conference in Houston yesterday.
“The No. 1 overall message, non-OPEC supply growth is very, very strong, which could change the parameters for the oil markets in the years to come, led by the United States, but also Brazil, Canada and Norway,” IEA Executive Director Fatih Birol said.
The IEA’s five-year forecast, closely watched by the energy industry, showed technological advances, improved efficiency and sagging oil prices encouraging shale companies to increase output, helping the U.S.’ boom.
Of the 6.4 million new barrels of oil that will be pumped on a daily basis between now and 2023, nearly 60% of them will come from the U.S. according, and those estimates may be even be revised higher if oil prices increase. Increased oil prices usually lead to increased domestic production.
Canada, Brazil and Norway are also expected to see their domestic production increase. Those three countries, together with the U.S., will have enough production to meet growing consumption to the end of this decade, the IEA estimates
Within OPEC, the Organization of Petroleum Exporting Countries, Saudi Arabia’s capacity is forecasted to reach 12.3 million barrels a day by 2023, meaning it could rival the U.S. as the world’s top producer. But the top oil-producing nation has traditionally under-produced to maintain a position as a “swing-supplier,” meaning a supplier that can increase or decrease production as the market dictates.
But counting all liquids, including those products down-market from natural gas, U.S. production is expected to rise to nearly 17 million barrels a day from about 13 million currently, according to the IEA. That far out-produces either Saudi Arabia or Russia.
Consumption is also expected to remain strong on the world stage bringing the production gap between oil demand and oil production capacity to the its lowest level since 2007. Oil prices that year were at record setting levels of $140 a barrel. The demand will be propelled by China, according to the IEA.
“We see a robust oil demand growth through 2023 and China continues to be the main driver,” Birol said.