According to the latest World Energy Outlook, released earlier this week by the International Energy Agency, U.S. shale oil will dominate world markets in the next decade, driving 80 percent of global supply growth and displacing OPEC as the market swinger.
The agency said that technological advancements and cost efficiency measures have turned the U.S. shale patch into a dominant market force with which OPEC, dismissive as it has been until now, will have to reckon. After all, the IEA’s forecast is that the United States will turn into a net exporter of crude in the second half of the next decade.
It will also, according to the IEA, become the largest exporter of LNG by the mid-2020s—arguably an even greater achievement given the prowess of Qatar and Australia in this segment.
It will not, however, last forever and the balance of energy power will again shift. Towards the end of the decade, U.S. shale patch production will plateau and the world will return to OPEC oil. But by the time that happens, renewables will have risen further. Demand for oil will not be as high as it is now, with the IEA forecasting a wide-scale adoption of renewable energy systems and, of course, electric vehicles.
These developments will keep prices in a range between $50 and $70 a barrel, the authority estimated, although it studied both a low-price and a high-price scenario to see how it would affect future oil supply and demand trends and renewable energy expansion.