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IEA Predicts Nightmare Scenario For OPEC


The U.S. will supply much of the world’s additional oil for the next few years, according to a new report from the International Energy Agency (IEA).

Over the next three years, the U.S. will cover 80 percent of the world’s demand growth, the IEA says in its newly-released Oil 2018 annual report. Canada, Brazil and Norway will cover the remainder, leaving no room for more OPEC supply.

The irony is that the substantial gains in output from shale will only be possible because of the OPEC cuts, which has tightened the market and boosted prices. This fact is not lost on OPEC producers. “If you are a shale oil producer, who brought you back? It was OPEC,” the UAE’s oil minister Suhail Al Mazrouei, said at a recent industry conference, according to Bloomberg. “Without OPEC there’d be chaos in the market.”

Indeed, the IEA’s new report paints a pretty gloomy picture for OPEC members, who are hoping to phase out their supply cuts after this year. With non-OPEC supply rising quickly, particularly in the U.S., OPEC may struggle to figure out a way to increase output without pushing down prices, according to the IEA’s analysis.

That could put pressure on the cartel to keep the production cuts in place for longer than they had wanted, although it seems hard to imagine they maintain the production ceilings for another three or four years. Doing so would mean handicapping themselves and ceding even more market share to U.S. shale and other non-OPEC producers. Still, it is unclear how this plays out – returning to full production, even if phased in gradually, presents its own problems, if the IEA’s forecast is accurate.

The IEA sees demand for OPEC oil actually declining in absolute terms over the next few years as it is edged out of the market by non-OPEC supply. OPEC production only grows by 750,000 bpd through 2023 under the energy agency’s forecast, although that also takes into account a 700,000-bpd decline in Venezuela.

The bottom line is that the IEA sees oil demand rising by 6.9 million barrels per day (mb/d) by 2023, with more than half of those increases coming from China and India. Meanwhile, supply grows by about 6.4 mb/d, with a whopping 3.7 mb/d coming from the U.S., nearly 60 percent of the total global supply increase.

By sector, petrochemicals starts to take on a larger role in driving oil demand, especially as the transportation sector starts to see a greater adoption of electric vehicles. But it isn’t just EVs – abundant oil and cheap natural gas are fueling a surge in petrochemical investments.

Nevertheless, while the IEA sees an explosion of shale output for the next five years or so, beyond that the story is different. The massive cuts to upstream investment since the collapse of oil prices in 2014 will begin to cause supply problems at the beginning of the next decade. Spending levels are only now starting to pick up, but are still at a fraction of pre-2014 levels, which means that there will be a dearth of new, large-scale conventional oil projects in several years’ time. “This is potentially storing up trouble for the future,” the IEA wrote in its report.

Moreover, natural depletion from existing fields essentially wipes out 3 mb/d of supply every year. That, combined with demand growth, means that the oil industry needs to replace “one North Sea each year,” the IEA says. But the industry is no longer spending enough to cover that gap. In 2017, new oil discoveries fell to another record low, with less than 4 billion barrels of oil equivalent found. The lack of new oil in the works is sowing the seeds of supply problems in the 2020s.

“The United States is set to put its stamp on global oil markets for the next five years,” Fatih Birol, the IEA’s Executive Director, said in a statement. “But as we’ve highlighted repeatedly, the weak global investment picture remains a source of concern. More investments will be needed to make up for declining oil fields – the world needs to replace 3 mb/d of declines each year, the equivalent of the North Sea – while also meeting robust demand growth.”

The IEA report will provide a fascinating backdrop to the start of the annual CERAWeek conference in Houston, where industry titans and oil ministers will gather this week. No doubt the aggressive forecast for U.S. shale will provide a lot of fodder for conversation for both shale boosters and anxious OPEC representatives.

By Nick Cunningham of

15 Comments on "IEA Predicts Nightmare Scenario For OPEC"

  1. Cloggie on Tue, 6th Mar 2018 1:24 pm 

    Did you hear that bang in the background?

    That was millimind who just shot himself.

    Millimind always tries to instrumentalise the IEA for his “the world is about to run out of oil and gas” meme.

    Well, that’s settled then.

  2. MASTERMIND on Tue, 6th Mar 2018 2:20 pm 


    Your boy was in my backyard yesterday at MSU! And Antifa was there! The pigs cant protect the fascist forever!

  3. MASTERMIND on Tue, 6th Mar 2018 2:21 pm 


    The End of the Oil Age is Imminent!

    Recently, the HSBC oil report stated that 80% of conventional oil fields were declining at a rate of 5-7% per year. This means that there will be an oil shortage of ~30 million barrels per day by 2030 and ~40 million barrels per day by 2040.

    What is mentioned far less often is that annual oil discoveries have lagged annual production since the 1980s.

    Now, this problem has nothing to do with the recent decline in the oil price, which started in 2014. This has been an on-going problem for the past 30 years. Now, the IEA is predicting oil shortages by ~2020 due to declining exploration.

    Here, the IEA blames this problem on the low oil price. But, this problem started in the 1980s. The problem is geological: we are running out of conventional cheap oil. Shale and tar sands are not the answer, either. Those resources are far too expensive, compared to conventional oil, because the global economy is based on cheap conventional oil. Expensive oil is not a replacement for cheap oil.

    Based upon the HSBC report and the IEA, the End of Oil Age will start around ~2020: there will be a dramatic economic depression due to exhaustion of cheap oil. This will cause a global economic collapse.

  4. Cloggie on Tue, 6th Mar 2018 2:26 pm 

    Your boy was in my backyard yesterday at MSU!

    I know these things weeks in advance.

    Smart boy and presentable. Our man in North-America and essential ingredient in the rebirth of European civilization (at your cost).

  5. Cloggie on Tue, 6th Mar 2018 2:30 pm 

    The End of the Oil Age is Imminent!

    Universal energy access by 2030 is now within reach thanks to growing political will and falling costs

  6. MASTERMIND on Tue, 6th Mar 2018 2:33 pm 


    Spencer gets blasted by AntiFa!

  7. Cloggie on Tue, 6th Mar 2018 4:13 pm 

    Spencer gets blasted by AntiFa!

    Look, he’s back!

  8. Boat on Tue, 6th Mar 2018 7:17 pm 


    Mexicans immigrate and send money home. Jews immigrate and send money home. Europe immigrates and we bail you out in two WW’s.

  9. MASTERMIND on Tue, 6th Mar 2018 7:25 pm 

    Denialism is another form of insanity that is prevalent these days. There are numerous people who haunt collapse sites to try and refute any claim that Collapse is actually in progress. They are obviously fully aware of it, but the coping mechanism here is just to deny every piece of evidence that becomes manifest. Their screams of denial sound like the squealing of a pig beginning delivered to the butchers shop. The volume of their protestations being directly proportional to the proximity of their inevitable fate….

  10. MASTERMIND on Tue, 6th Mar 2018 7:29 pm 

    Immigration boosts a countries economy (GDP) substantially and creates jobs.
    Source: Wharton School of Business

    What Mass Immigration Wave?

    Behold the Master Race!

    This is how you treat a Fascist !

    When class consciousness occurs!

  11. Boat on Tue, 6th Mar 2018 7:32 pm 

    There are other sites that claim collapse? Holy shyt, I thought all the world’s crazies were here.

  12. Boat on Tue, 6th Mar 2018 7:36 pm 


    Bring all the collapse doomers here. With my track record of no collapse many lost souls might quit wasting their time.

  13. Boat on Tue, 6th Mar 2018 7:41 pm 


    Immigration causes unsustainability and desalination plants. Don’t mess with my swimming pool. The US has 320 million people, 250 sounds better. Bring on the robots.,

  14. Cloggie on Wed, 7th Mar 2018 12:26 am 

    Mexicans immigrate and send money home. Jews immigrate and send money home. Europe immigrates and we bail you out in two WW’s.

    Mexicans immigrate, send money home and take over large parts of your country. Adios America! Reconquista!

    Jews immigrate, took over your finances, media and politics between 1912-1933 and sicked you twice against your mother civilization to destroy it. Oh and they plan to phase you out as well, but you are too dumb to understand it:

    The worst thing that could happen is that all 330 million Americans would apply for membership of Eurosphere, the next Big Thing in geopolitics. 120 million white Americans is more than enough, thank you very much. You boat, meathead, supertard, etc. are simply unwanted, not good enough. You can Brasilianise, let your children/grandchildren become third worlders, like mr Krugman wants you to and phase yourself out from history. Nothing lost with you. Anything else would be raysiss, right boat? Perhaps I am going to give you to my buddy Anonymouse1 to function as his personal slave.

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