Billionth Barrel Bakken
Gregory Bull/AP
By Dmitry Zhdannikov and Christopher Johnson

LONDON -- Global oil demand growth will accelerate next year as the world economy expands and will again be met by rising supplies from the United States and Canada, further eroding OPEC's market share, the West's energy watchdog said Friday.

But the International Energy Agency said in its monthly report that risks to oil production in several regions remained acute.

"Supply risks in the Middle East and North Africa, not least in Iraq and Libya, remain extraordinarily high," the IEA said. "Oil prices remain historically high and there is no sign of a turning of the tide just yet."

"Whether in crude or product markets, there is little room for complacency," it added.

North Sea Brent crude oil hit a nine-month high above $115 a barrel in June as a Sunni Islamist insurgency swept across northwestern Iraq, taking control of large parts of the oil producing country and shutting down its largest refinery.

The oil market has weakened over the last month but remains nervous about further supply shocks. Brent was trading at around $108.20 a barrel by 0730 GMT on Friday.

Making its first forecasts for 2015 in a monthly report, the IEA which advises major consuming nations on energy policy, said it expected global oil demand to grow by 1.4 million barrels per day, or bpd, next year, up from 1.2 million this year.

"Newly industrialized and emerging market economies are once again forecast to lead the gains," it said.

The world's second largest oil consumer, China, will see oil demand growing by 4.2 percent, up from 3.3 percent this year, while the largest oil user, the United States, will only see gains of 0.2 percent to 19.1 million barrels per day, up from a growth of 0.6 percent this year.

North America Leads Supply Gains

The IEA said it expected non-OPEC supply growth to average 1.2 million bpd next year, in line with increases in 2013 and 2014.

"The U.S. and Canada remain the mainstays for growth, but sources are expected to be more diverse than in 2014," said the IEA, naming Brazil, Britain, Vietnam, Malaysia, Norway and Columbia among countries which will grow output in 2015.

North America will remain the leader in 2015, contributing about twothirds of the net non-OPEC supply increase compared to 85 percent in 2014.

U.S. light tight oil, mostly from North Dakota and Texas, as well as Canadian bitumen, represent well over half of 2014 non-OPEC supply growth, the IEA said.

It added that the Eagle Ford Shale Play in south Texas will remain one of the most dynamic oil provinces with output growing by 34 percent to 1.4 million bpd this year and exceeding 1.6 million next year.

"Certain OPEC countries have experienced severe disruptions, so North America has made the difference in terms of avoiding severely constrained global supply," the IEA said.

Iraqi Bloodshed

The U.S. shale oil boom has eroded the market share of the Organization of Petroleum Exporting Countries and the trend will likely continue next year, it said.

The IEA forecast demand for OPEC crude would edge down in 2015 to 29.8 million bpd, from 29.9 million this year. That is slightly below the level pumped by the group in June at just over 30 million bpd.

Insurgency in Iraq remains among the main threats to OPEC's production targets with output down by 260,000 bpd in June alone to 3.17 million bpd after an assault by radical Islamist militants forced the closure of the Iraq's biggest refinery at Baiji and cut production from the giant Kirkuk field.

"A monthlong military campaign by radical militants has shaken Iraq's foundation and threatened oil operations in the north of the country, but the prized oil fields in the south are so far insulated from the fighting," the IEA said.

It added that exports from Iraq's giant southern fields were down in June mostly due to logistical snags and maintenance works at the Gulf Basra terminal.

"Prolonged sectarian bloodshed may shake investor confidence and set back longerterm growth in the country that had been poised to provide the biggest source of new OPEC capacity over the next decade," the IEA said.

Iran also saw a steep decline in exports in June to 1.08 million bpd after running at an average of 1.42 million bpd in January-May partially because of lower Chinese purchases to fill its strategic reserve.


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12 Comments

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.kowalski440mag

There are no 'supply risks' in N. Africa and Iraq as well as any other unstable oil producing country just for the simple FACT that Saudi Arabia can(and has) at any time raise it's oil output. Commodity traders act like 12 yr old children who bid up oil prices on one/or repeated "The Sky is Falling" situation(s). The current crap of traders should be replaced with grown-ups who use REAL/ LOGICAL data in determining prices. It ticks me off to no end knowing I'm paying $1 more per gallon only because of 'The Sky is Falling Price Setters.'

July 11 2014 at 12:43 PM Report abuse rate up rate down Reply
1 reply to .kowalski440mag's comment
true.liberal

Oil speculators couldn't care less the direction of oil prices. They ONLY care that they're on the right side of the market.

Furthermore, by definition, every buyer of an oil futures contract is also a seller of an oil futures contract, just as every seller of such a contract is also a buyer. As a result, the only net effects of speculation are two positive ones. First, the existence of oil speculators increases market liquidity. Second, these futures traders contribute to more efficient "price discovery".

It ticks me off that dunces like you lack the cognitive facilities to comprehend something so simple, leaving you as easy prey for the government goons who inflict far more pain and suffering on American consumers.

July 11 2014 at 1:30 PM Report abuse +1 rate up rate down Reply
4 replies to true.liberal's comment
drpmindmender

The only, truly important number that matters regarding the US' oil boom, is when the number of barrels of crude oil we import outside of North America is ZERO.

July 11 2014 at 11:00 AM Report abuse rate up rate down Reply
MAD_DAWG1

We need to shut down opec. They have way too much power over the price of oil

July 11 2014 at 8:49 AM Report abuse -1 rate up rate down Reply
1 reply to MAD_DAWG1's comment
true.liberal

How do "we" shut down a foreign organization in which "we" aren't a member?

July 11 2014 at 9:21 AM Report abuse -1 rate up rate down Reply
2 replies to true.liberal's comment
darbrow717

We send your mom in to do some back room shananigans, then they'll do whatever we want.

July 11 2014 at 10:10 AM Report abuse rate up rate down
true.liberal

Anything we want?

Even equip a pathetic imbecile like you with a functioning brain?

Now, that'd be cool!

July 11 2014 at 10:28 AM Report abuse rate up rate down
hemimanrick

How much of the oil do we use?
Or do we ship it out since it is heavy crude.
Rick

July 11 2014 at 8:09 AM Report abuse rate up rate down Reply