A landmark deal in 2017 between OPEC and rivals including Russian Federation to curb output to reduce global oversupply materially improved the outlook for other producers as prices rose sharply throughout the year, the IEA said in Oil 2018, an annual report looking at the next five years.
Production of shale oil is expected to represent more than half of the output growth for the world of 6.3 million bpd, said the IEA in its outlook report of five years.
"The U.S.is set to put its stamp on global oil markets for the next five years", the IEA said in its latest monthly report. American oil output will surge past Russian Federation, now the world's largest crude producer at about 11 million barrels a day. Once heavily dependent on imports from the Middle East, the U.S.is getting closer to achieving its goal of producing enough crude to meet domestic demand for refined products like gasoline.
Another 1 million barrels per day will be added by natural gas liquids to reach over 4.7 million barrels daily in 2023. Global demand will increase almost 7 million barrels per day by 2023 to 104.7 million barrels per day, the report said, with China the main proponent of growth in demand.
OPEC, the Organization of the Petroleum Exporting Countries, will increase capacity only modestly through 2023 because of sharply falling production in Venezuela, according to the energy agency forecast.
Output, however, is expected to grow by only 6.4 mbd to reach 107 mbd by 2023.
Production cuts by the group and non-OPEC member countries led by Russian Federation have helped stabilize oil prices mostly above $61 a barrel this year and any decision to phase out or extend the curbs would affect global prices.
"More investments will be needed to make up for declining oil fields - the world needs to replace three million barrels per day of declines each year, the equivalent of the North Sea - while also meeting robust demand growth", added Birol.
Despite capital discipline talk and more of a focus on returns and not growth, producers in the US regrouped quickly after a stabilization of oil prices followed by prices rising, said IEA.
The IEA warned that companies will need to start spending again to avoid the potential for crude-oil shortages that could cause prices to surge.
That means demand growth of around 1.1 percent per year on average.