U.S. Will be the Leading Oil Producer by 2016, Says IEA

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U.S. Will be the Leading Oil Producer by 2016, Says IEA
U.S. Will be the Leading Oil Producer by 2016, Says IEA

U.S. Will be the Leading Oil Producer by 2016, Says IEA

The International Energy Agency (IEA) says that the United States will stride past Saudi Arabia and Russia to become the world’s top oil producer by 2016. The optimistic view from the organization seems to have impacted oil prices, particularly after the U.S. started producing huge crude quantities that are being stockpiled.

In its statement IEA says that the U.S. will be counting on its own oil production and will be less dependent on OPEC supply. The U.S. learned its lesson from the 1973 global oil crisis wherein it had to face a lot of problems to meet its energy requirements. The IEA also says that by 2020, the oilfields of Texas and North Dakota will be past their prime and the Middle East will regain its dominance.

Thus, it looks the U.S. dominance won’t last long in the energy sector, which will again be dominated by the Middle East oil producing countries. In its 2012 World Energy Outlook, the IEA had admitted that the United States would surpass Riyadh as top producer in 2017. In a similar prediction, it had said that China will be the leading importer of crude oil.

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Energy Security will be a Major Issue

As the estimates that tell that the U.S. will continue to produce copious amounts of oil and natural gas through at least 2016 and China will be the leading importer, the energy politics will be in front of international relations. China which hardly has known sources of oil, depends a lot on imports will definitely be facing huge energy insecurity.

The Energy Information Administration in its statement admits that with natural gas production likely to spike for the next two decades at a minimum, much of the need will be met; however, these are long term predictions which do not consider the role of alternative sources of energy like wind and solar which are being promoted by governments around the world.

Post-2020 Middle-East Will Again Dominate Oil Sector

Though the U.S. will become a leading producer of oil, IEA Chief Economist Fatih Birol says that due to the limited resource base (of U.S. tight oil); it is going to plateau and decline. After 2020 there will be a major dominance of Middle East oil. In other statement, IEA has admitted that the oil prices would continue to rise and spur development of unconventional resources.

To contact the reporter of this story: Jonathan Millet at john@forexminute.com