IEA predicts a collapse of American oil production next year

The International Energy Agency estimates that U.S. oil supplies will decline by nearly 400,000 barrels per day in 2016. Non-OPEC oil producing countries, including the US, will have to cut production significantly next year as continued low oil prices negatively affect the industry, giving Saudi Arabia a chance to regain some of its lost positions in global markets.

In its monthly report, the IEA notes that costly production in the United States will decline by 400,000 barrels per day in 2016, and this decline has already begun in July. “The collapse in oil prices will cut costly production at Eagle Ford in Texas, as well as at some fields in Russia and the North Sea, which could lead to a loss of 1.5 million barrels a day next year. The IEA predicts the biggest decline in 24 years, ”the report says.

The agency, which advises the world's largest economies on energy policy, also expects low prices to drive global oil demand to a five-year high this year.

The IEA's predictions are among the darkest for American oil production. They are based on the fact that US oil prices fell to less than $ 40 a barrel last month, for the first time since the financial crisis. At the same time, the report forecasts positive outlook for the Organization of the Petroleum Exporting Countries (OPEC), which shocked markets last year by choosing not to cut production. In the struggle for market share, OPEC countries have chosen to push the exit of higher-value producers such as the United States.

That said, the International Energy Agency expects China, the world's second largest oil consumer, to maintain its oil purchases high despite recent stock market turmoil, currency devaluation and negative macroeconomic news.