U.S. oil production is booming and is forecast to top that of heavyweight Saudi Arabia and rival Russia this year, a global energy agency said Friday.
The International Energy Agency said in its monthly market report that U.S. oil production, which has already risen to its highest level in nearly 50 years, will push past 10 million barrels a day in 2018 as higher prices entice more producers to start pumping.
"This year promises to be a record-setting one for the U.S.," it said.
Reuters reported that along with gains in Canada and Brazil, rising U.S. output will drive up non-OPEC supply by 1.7
million barrels per day (bpd) in 2018, versus last year's 0.7 million bpd increase. Non-OPEC nations will be producing just short of 60 million bpd this year.
"Explosive growth in the U.S. and substantial gains in Canada and Brazil will far outweigh potentially steep declines
in Venezuela and Mexico," the IEA said, according to Reuters.
The price of crude has risen about 50 per cent since June, with the U.S. benchmark now trading around $63 US a barrel, on evidence of strong global economic growth and a pact among OPEC countries and Russia to limit their production.
The OPEC-Russia deal worked for them: as prices rose they made more money despite pumping less crude, the IEA said. Russia is estimated to have earned an extra $117 million a day and Saudi Arabia $100 million daily by limiting their output and nudging up prices.
But the higher prices also brought back U.S. producers, particularly in shale oil, which requires higher prices in order to break even.
U.S. production rose last year to its highest since 1970 and is expected to keep growing, assuming OPEC and Russia don't decide to increase their own production — a decision of which there is no sign, the IEA says.
Even the hurricanes of last year didn't hinder the U.S. oil production boom.
For now, the extra crude from the U.S. is meeting growing demand as the world economy expands at a strong pace.
Global demand for oil is forecast to grow by 1.3 million barrels a day, the same as the year before. It's not growing faster because some consumers are reducing spending on oil because of the higher prices and switching to other types of energy, like natural gas.