The United States would take the number one slot worldwide for oil supply growth in the next five years, the International Energy Agency(IEA) has predicted.
According to the agency, in its publication, the increase would be driven not by Donald Trump’s pro-oil energy policy – which the IEA expected would take time to have an impact – but from continuing success for low-cost, shale oil drillers.
While within OPEC, the bulk of new supplies will come from major low-cost Middle Eastern producers, namely Iraq, Iran, and the United Arab Emirates. Nigeria’s supply growth is expected to decline alongside Algeria and Venezuela in the OPEC community.
Fatih Birol, the IEA’s executive director, also added that Canada and Brazil will be the next two fastest-growing oil suppliers after the US.
“We are witnessing the start of a second wave of US supply growth, and its size will depend on where prices go,” said Dr Fatih Birol, the IEA’s Executive Director. “But this is no time for complacency. We don’t see a peak in oil demand any time soon. And unless investments globally rebound sharply, a new period of price volatility looms on the horizon.”
“The largest contribution to new supplies will come from the United States.”
The IEA expects US light tight oil (LTO) production to make a strong comeback and grow by 1.4 mb/d by 2022 if prices remain around USD 60/bbl. Expectations for US LTO are higher than last year’s forecast thanks to impressive productivity gains.
The United States responds more rapidly to price signals than other producers. If prices climb to USD 80/bbl, US LTO production could grow by 3 mb/d in five years. Alternatively, if prices are at USD 50/bbl, it could decline from the early 2020s.
It will be recalled that last year Nigeria was the biggest beneficiary of US production oil slump. The US oil production fell by about 600,000 barrels a day since peaking in 2015, and Nigeria’s crude became attractive to the US again to fill the gap, which ultimately helped Nigeria regained part of its lost market shares in Global crude export, as Imports from Nigeria surged to 559,000 barrels a day in mid-March, compared with an average of 52,000 for all of 2015.
Although, China and India, are tipped to be the largest buyers of crude oil, the latest announcement could again put Nigeria’s oil market in another nightmare in the coming years, where the country’s export crude cargoes according to reports, every month were grappling to attract end-users and refinery demand, and were instead being stored on ships and on storage terminals, idling away which adversely affected Nigeria economy.