According to the International Energy Agency (IEA), the increased supply of shale oil in the US would have resulted in lowering world oil prices; however, global events in oil markets have restricted production in several oil producing nations.
Protests in Libya and oil thefts in Nigeria have reduced global supply and violence in Iraq has led to concerns that oil production in Iraq may be cut from the country in future. These events, among others, have in fact acted to increase the price of Brent crude to its highest daily level of the year (US$ 115/bbl) on 19 June.
Prices have since declined and the IEA expects it to average less than US$ 110/bbl for the year. Increased US production has resulted in balancing the supply gaps and keeping prices at fairly constant levels. However, West Texas Intermediate crude oil is expected to remain approximately US$ 7 – US$ 10/bbl below that of Brent.
According to the Bank of America, the US is expected to hold its spot as the top oil producing country this year because production in the second half of the year is expected to increase further.
In its latest Short Term Energy Outlook (STEO), the US Energy Information Administration (EIA) outlined its expectation that oil production in 2014 would average 8.46 million bpd and increase to 9.28 million bpd in 2015. That rate of production will lower imports to a 22% share of consumption, the lowest share in 45 years.
The IEA holds that US oil and natural gas liquids production will reach 13.1 million bpd by 2019, a bit higher than EIA’s forecast of 12.28 million bpd. However, IEA expects the US to lose its top spot in global oil production in the 2030s, when it expects the Middle East to re-emerge as a top force due to its abundant and low cost resources.
Adapted from a report by Emma McAleavey.
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