The impact of recent OPEC production cuts on world oil supply were somewhat blunted by the responding ramp-up in U.S. tight oil and natural gas liquids, according to BP Chief Economist Spencer Dale.

As the OPEC-led cuts worked as expected to trim the world's oil stock overhang, U.S. tight oil output grew very rapidly. Since the end of 2016 through the spring of this year, U.S. tight oil production has increased by more than 1.5 million barrels per day, Dale said.

"Indeed, the scale of the increase in U.S. tight oil meant the impact of the production cuts was increasingly offset as we moved through 2017," Dale said June 13 in announcing BP's Statistical Review of World Energy 2018.

In a bid to boost sagging oil prices at the time, toward the end of 2016, OPEC and non-OPEC allies agreed to freeze production at about 32.5 million barrels per day for six months starting in January 2017. The agreement was extended twice and will remain in force until the end of this year.

"The speed and scale of OPEC's actions mean that it continues to have the ability to smooth temporary disturbances to the oil market. But the relatively rapid response of U.S. tight oil reinforces the limits on OPEC's power. If OPEC tries to resist more permanent or structural changes in the market, there is an increasing risk that these actions will quickly be cancelled out by the responsiveness of U.S. tight oil," Dale said.

However, increasing bottlenecks in the prolific Permian Basin, for example, alongside indications of declining investment interest, indicate that the initial rapid pace of growth in U.S. tight oil output is flattening out and could be waning.

Meanwhile, natural gas was the fastest growing source of energy in 2017, with Dale calling 2017 "a bumper year" for the year due in part to an increase in Chinese, Middle Eastern and European demand. As the OPEC production cuts started to "bite" and inventories began to drop, for the first time since 2012, the dated Brent crude oil price average increased in 2017 to $54.19 per barrel, up from an average of $43.73/bbl in 2016.

The growth in natural gas consumption was more than matched by increasing production, particularly in Russia, Iran, Australia and China.

Together, natural gas and renewables accounted for about 60% of the total energy demand growth seen in 2017.