Worldwide energy markets are set for "major upheaval" as the USA cements its status as the world's largest oil and gas producer, while China overtakes it as the biggest oil consumer.
Paris-based IEA predicts that US shale oil producers will boost their output by 8 million barrels a day between 2010 and 2025, an increase that "would match the highest sustained period of oil output growth by a single country in the history of oil markets" - rivaling even the massive increase posted by Saudi Arabia between 1966 and 1981.
That will keep prices down and help make the USA a net exporter of oil - in addition to gas - by the late 2020s.
"Solar is forging ahead in global power markets as it becomes the cheapest source of electricity generation in many places, including China and India", IEA executive director Dr Fatih Birol avers.
US oil prices have risen above $55 a barrel recently amid geopolitical tensions overseas, supply disruptions and an anticipated extension of OPEC's production cuts next year.
Oil price should continue to rise towards $83 a barrel by the mid-2020s as global oil demand is poised to fall only modestly alongside the expected rise in electric vehicles over the next two decades, the International Energy Agency, or IEA, said on Tuesday.
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OPEC also says that OPEC said inventories in developed economies declined by 23.6 million barrels in September to 2.985 billion barrels, to just 154 million barrels above the five-year average. Brent futures LCOc1 were down $1.24, or 2 percent, at $61.92 a barrel by 11:53 a.m. EST (1653 GMT), while U.S. West Texas Intermediate (WTI) crude CLc1 was down $1.16, or 2 percent, at $55.60 per barrel. The country will "see a reduction of these huge import needs", Birol said at a press conference in London. The U.S. government said on Monday U.S. shale production in December would rise for a 12th consecutive month, increasing by 80,000 bpd.
Sparked by technological advances from its shale fields, USA production will see growth of 8M bbl/day during 2010-25, accounting for 80% of the increase in global supply over the period, the report says. The cartel, led by Middle East producers, will see its share of the market grow to 46 per cent in 2040 from 43 per cent now. The IEA said warmer temperatures could reduce consumption, while sharply rising output from some producer countries might bring back the global crude glut in the first half of 2018.
As shale has outperformed expectations so far, the IEA added a scenario in which the industry beats current projections.
"The oil market should be able to find a longer-term equilibrium, with the oil price in a range of $50-70 a barrel", the agency said.
The Paris-based IEA argued that with consumption in petrochemicals and other transportation still growing, the drop in oil demand would be at a modest pace.