Reduced US production may benefit Middle East exporters
- Shale oil production in the US is expected to drop by 385,000 barrels a day next year
- Production outside the Organisation of Petroleum Exporting Countries is expected to fall by 500,000 barrels a day
- The IEA says US oil production is likely to bear the brunt of an oil price decline
Shale oil production in the US will drop by 385,000 barrels a day next year due to persistently low oil prices, according to the Paris-based International Energy Agency (IEA).
In a report released on 11 September it said that production outside the Organisation of Petroleum Exporting Countries (Opec) will fall by 500,000 barrels a day to 57.7 million 2016.
US oil production is likely to bear the brunt of an oil price decline, the IEA said in its report. After expanding by a record 1.7 million barrels per day in 2014, the latest price rout could stop US growth in its tracks.
At the same time, the IEA expects demand for oil to hit a five-year high in 2015, as cheaper prices encourage increased consumption.
If the collapse in oil prices does shutdown shale operations in the US it could be seen as a victory for Saudi Arabias oil strategy.
Since June Opec, led by Saudi Arabia has resisted pressure to cut production, prioritising market share over profit margins.
Middle East benefit from lower production costs and are likely to remain profitable in a lower oil price environment.
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