The U.S. will lead the world in oil production increases by 2021 in spite of the country taking the taking the “biggest hit for now,” the International Energy Agency (IEA) said on Monday.
In its annual medium-term oil market report, the IEA said that while U.S. light, tight oil (LTO) output is “falling steeply for now” amid a low price environment, the market will begin rebalancing in 2017 and, soon after that, the U.S oil industry could see a robust increase in oil production.
Another country set to ramp up production is Iran, whose supply has come back into the market since international sanctions on the country were removed recently.
By 2021, the IEA said, “the U.S. and Iran are seen leading production gains among non-OPEC and OPEC countries respectively.”
The IEA’s report pointed to the risk of an oil price spike in the later part of the outlook period (2017 to 2021) “arising from insufficient investment” as many oil producers around the world seek to mitigate low oil prices by cutting costs and closing rigs.
Oil prices plunged from a high of around $114 a barrel in June 2014 and are currently at around $33 for benchmark Brent crude and $30 for U.S. West Texas Intermediate (WTI).