US seen dom­i­nat­ing oil mar­ket af­ter big­gest boom

Mint ST - - MARKETS AND FINANCE - BY GRANT SMITH, KELLY GILBLOM & FRANCINE LACQUA LONDON

The sup­ply surge from US shale oil and gas will beat the big­gest gains seen in the his­tory of the in­dus­try, the In­ter­na­tional En­ergy Agency (IEA) pre­dicted.

By 2025, the growth in Amer­i­can oil pro­duc­tion will equal that achieved by Saudi Ara­bia at the height of its ex­pan­sion, and in­creases in nat­u­ral gas will sur­pass those of the for­mer Soviet Union, the agency said in its an­nual World En­ergy Out­look.

The boom will turn the US, still among the big­gest oil im­porters, into a net ex­porter of fos­sil fu­els.

“The im­pli­ca­tions of the shale revo­lu­tion for in­ter­na­tional mar­kets and en­ergy se­cu­rity have been pro­found,” said the Paris-based In­ter­na­tional En­ergy Agency, which ad­vises most of the world’s ma­jor economies on en­ergy pol­icy.

US drillers have “weath­ered the tur­bu­lent pe­riod of lower oil prices since 2014 with re­mark­able for­ti­tude”.

While oil prices have re­cov­ered to a two-year high above $60 a bar­rel, they’re still about half the level traded ear­lier this decade, as the global mar­ket strug­gles to ab­sorb the scale of the US bo­nanza.

It’s taken the Or­ga­ni­za­tion of Petroleum Ex­port­ing Coun­tries (Opec) and Rus­sia al­most 11 months of pro­duc­tion cuts to clear up some of the over­sup­ply.

“The US will be undis­puted leader of global oil and gas mar­kets for decades to come,” In­ter­na­tional En­ergy Agency ex­ec­u­tive di­rec­tor Fatih Birol said Tues­day in an in­ter­view with Bloomberg Tele­vi­sion. “In terms of oil, big growth com­ing from shale oil, and as such there’ll be a big dif­fer­ence be­tween the US and other pro­duc­ers.”

The agency raised es­ti­mates for the amount of shale oil that can be tech­ni­cally re­cov­ered by about 30% to 105 bil­lion bar­rels.

Fore­casts for shale-oil out­put in 2025 were bol­stered by 34% to 9 mil­lion bar­rels a day.

US shale “has emerged from its trial-by-fire as a leaner and hun­grier ver­sion of its for­mer self, re­mark­ably re­silient and re­act­ing to any sign of higher prices caused by Opec’s re­turn to ac­tive mar­ket man­age­ment,” the IEA said.

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