Despite best efforts to promote electric cars and alternative energy sources, the global thirst for oil remains unquenched. In fact, according to recent forecasts published by the International Energy Agency (IEA), demand is set to rise to around 103 million barrels a day by 2024. This would mean six million barrels more per day than current figures. The IEA experts also see no sign of the demand letting up in years to come. Although Europe is likely to consume less oil moving forward, Asia and the USA will continue to drive global demand skywards. The main culprits for this growth are the petrochemical industry through its production of plastics as well as air travel.
According to the Oil 2019 report published by the IEA in mid-March, the balance of power of the global oil market is shifting. Although the IEA forecast deems it possible that the production volumes of the 15 OPEC states could fall slightly, partly for strategic reasons and partly due to US sanctions which affect Iran and Venezuela in particular, the US is continuing to crank up its oil production.
The United States is riding the growing shale oil wave, which could account for 70 percent of global oil production growth over the next five years. Large corporations such as Exxon-Mobil, Chevron and BP are increasingly investing in more short-term shale oil projects, which had long been left to the smaller companies, writes Neue Zürcher Zeitung (NZZ). At the same time, it would appear as though corporations have developed ways to drastically reduce the costs associated with major projects, thereby increasing the likelihood of a return on their investments.
The next few years could see the United States rising from being the largest oil importer to the most important exporter, thereby gradually freeing itself from its long-standing dependency on imports. Based on the forecast production volumes, they are not only overtaking Russia, but are also quickly catching up with Saudi Arabia. The exported oil volumes could exceed imports for the first time, and that as early as 2021. The IEA estimates that from 2024 the USA could be exporting nine million barrels a day.
Increasing competition from the USA makes it more difficult for the OPEC states to influence the oil price through agreed adjustments to production volumes. The change in international trade flows of crude oil will have a profound effect on geopolitics, says IEA Director Fatih Birol.
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