The U.S. in 2018 led the world in crude oil production growth and for the first time in two decades also became the leader in demand growth, as consumption increased more than 500,000 barrels per day, the International Energy Agency said March 11.
These shifts will have major implications for supply, demand and trade, the agency said in its Oil 2019 report.
In just under 10 years, the U.S. has become a major crude oil exporter, driving an unprecedented transformation in the world oil market, which in turn strengthens world oil security by increasing the choice of suppliers and reducing reliance on traditional crude oil sources that require long-term contacts, IEA Executive Director Fatih Birol said during CERAWeek by IHS Markit in Houston on March 11.
The U.S. ability to turn into a major crude oil exporter has come from incredible growth in U.S. shale, from a negligible amount in 2010 to more than 7 million bbl/d at the start of this year, Birol said. The IEA expects U.S. shale production to grow by another 3.3 million bbl/d to 2024.
If prices rise above the base case $60/barrel, production would be higher, Birol said. Additionally, production will be driven by oil majors as they take larger shares of the oil patch from independent oil producers, as their larger budgets shield them from the crude oil price.
World oil demand growth is forecast to slow through 2024. Driven by China's slowing economy and efforts to curb pollution, and the International Maritime Organization's marine fuel sulfur regulations known as IMO 2020, demand growth is expected to slow to 1.2 million barrels per year on average.
However, the U.S., which saw crude oil consumption exceed China's to become the largest consumer in the world in 2018, is expected to see impressive demand growth driven by a strong economy and increased demand from the petrochemical sector through 2024.
The IEA expects total demand growth of 7.1 million bbl/d through 2024.
Going forward, the oil markets need to pay attention to the IMO 2020, which will cause "the most important shake up since the phase out of lead," Birol said. Technology is also going to play a more important role in both supply and demand, he said.