Saudi Arabia will be overtaken by the US as the world’s leading energy producer in the next twelve months according to the latest monthly report from the International Energy Agency (IEA).
The new forecast by the IEA, which advises large industrialized nations on energy policy, has significantly slashed the time it would take for Saudi to be replaced by a major competitor as the world’s largest oil producer.
Previous reports estimated that it could take at least another decade for the US to become the premier oil producing nation, but relentless growth in the US and cuts to oil production by Organization of the Petroleum Exporting Countries (OPEC) members last year allowed US production to surge to 10.4 million barrels per day, overtaking Saudi Arabia’s 10 million barrels per day.
The IEA report said that “the stage was set for a strong [US] expansion last year when non-OPEC supply, led by the U.S…pushed up world production,” to offset output cuts by the Organization of the Petroleum Exporting Countries and other producers.
The forecast means that US demand from the global energy market would be reduced much earlier than anticipated, which would have a huge knock-on effect across the world. America would have accomplished one of its major energy goals by reducing its dependence on OPEC, and in particular, Saudi Arabia and Venezuela.
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Neil Atkinson, head of the oil industry and markets division at the IEA, said “we are in unchartered waters,” while explaining the shift amongst the major players in global oil production.
Experts in the market have long predicted the geopolitical implications of US energy self-sufficiency. It is thought that if Washington feels its strategic interests are no longer tied, as they have been, to Saudi Arabia and other volatile Middle Eastern countries, it may not attempt to police the region, secure trade routes, or monitor politics and relations to ensure inexpensive access to production sites’ reserves.
With the shifting dynamic, however, instability in the region is predicted to give the US an opportunity to position itself as the cheap provider of energy in the future. Additionally, if the United States pulls out as policeman by changing its foreign policy, then other countries, such as China, Japan, and Korea, will be challenged to become more involved.[Source: MEM]