The International Energy Agency (IEA) on Mar.05 forecast the USA would become the world's top crude producer by 2023 with production hitting a record of 12.1 million barrels a day.
"Ethane, liquefied petroleum gases and naphtha, pose a bigger threat to the refiners' market share than electric vehicles and gas-powered transportation combined", the IEA said, estimating refiners would see just 4.8 million bpd of the demand growth to 2023, missing out on 30 percent of it. He noted the global petrochemical sector is "one of the blind spots of the oil market debate", with the IEA projecting new petrochemical capacity to represent 25% of oil-demand gains by 2023, driven by projects in the USA and China.
He added: "We follow us oil production really closely". Kuwait especially is likely to argue that will be necessary to keep oil prices from going too high since it is keenly aware that the high prices of the early 2010s were exactly what stimulated the very USA shale oil investment and energy efficiency technologies that are plaguing the long run outlook for OPEC oil today. At the same time, growth in gasoline and diesel usage will be held back by fuel efficiency improvements and declining consumption in the developed world, the IEA said. The tariffs on imported steel would affect a wide array of industries, from aerospace to auto manufacturing, chemicals, oil products and more.
"Colossal growth in North American supply from 2018 to 2023 raises the crucial question of whether there is enough pipeline capacity to transport and sell all of that oil", the Paris-based agency said in a report.
World oil indexes started this week with a slight upward movement supported by news that Libya's largest oil field was temporarily idled, as well as forecasts that US crude inventories may have posted a surprise decline last week. With shale and other non-Opec supply rising, demand for Opec crude plus withdrawals from inventories will average 31.8 million bpd in 2019, the IEA said, 1.8 million bpd less than its last medium-term forecast. The investment yielded four billion barrels of crude, condensate and NGLs globally - not since the 1930s was so little oil found. Each year the world needs to replace 3 million bpd of supply lost from mature fields while also meeting robust demand growth.
However, despite rising prices, the IEA noted that the oil industry has yet to recover from the "unprecedented" two-year drop in investment following the oil price crashing in mid-2014. At the same time, continuing to restrict supply could cause the market to overshoot on the upside.
"It strengthens the case for a potential trade war", George Wilkes, an analyst at Sucden in London, told S&P Global Platts. "With seaborne oil traveling longer distances, energy security, one of the IEA's core missions, will remain as critical as ever".