The global oil market will be transformed over the next five years as faster-than-expected production growth in North America combines with a greater acceleration in demand than predicted among Asian and Africa countries, according to a new report.
Although it is well known that the US will become the world's largest oil producer within the next five years the rise in production is "even steeper than previously expected", said Maria van der Hoeven, the executive director of the International Energy Agency (IEA), which has published the report. Add in the faster-than-expected rise in production from the Canadian oil sands and the rise in North American supply constitutes a "game changer", Ms van der Hoeven said.
At the same time, oil demand from the so-called OECD group of 20 leading Western nations will be overtaken this quarter by demand for non-OECD states, such as China and India, representing a further milestone in the rise of the East and another landmark on the global oil map.
"North America has set off a supply shock that is sending ripples throughout the world," Ms van der Hoeven said, adding that the supply shock will be as transformative to the global oil market over the next five years as was the rise of Chinese demand over the last 15 years.
US oil production is soaring as the revolution in fracking gas from shale extends to removing oil from the hydrocarbon-heavy rocks, with North Dakota a particular hotspot.
Fracking, or hydraulic fracturing, is a controversial practice that releases oil and gas from shale by blasting a mixture of water, chemicals and sand into the rocks.
The report by IEA also predicted that after years of decline, UK North Sea oil production would grow by 40,000 barrels a day to 1 million barrels a day by 2018 "as new fields offset declining production at mature fields".
Furthermore, a range of political and security problems in northern and western Africa – such as the attack on BP/Statoil's plant in Algeria in January and rising sectarian violence in Nigeria – could have "significant implications" for the supply of oil from countries such as Nigeria, Angola, Libya and Algeria.