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U.S. projected to "dominate" oil supply growth over next five years

The U.S. will account for the largest share of global oil production increases over the next five years, according to an International Energy Agency report released Monday.

Data: IEA; Chart: Naema Ahmed/Axios

Why it matters: It's the latest sign that analysts see room for growth in the fracking-driven U.S. boom, even after years of surging output with mixed financial returns.

By the numbers: IEA's latest half-decade forecast sees the U.S. accounting for roughly 70% of the increase in global production growth, noting the U.S. "continues to dominate supply growth in the medium term."

  • The report sees the U.S. adding 4 million barrels by 2024 compared to last year's production levels.
  • The largest increases are slated to come from crude oil from shale formations, notably the Permian Basin region of Texas and New Mexico.
  • However, the rate of growth slows considerably during the latter part of the forecast period (see chart above).

Other key sources of global oil supply growth over the next half-decade include Brazil, Iraq, and Guyana, where Exxon and partners are planning to bring some huge offshore finds into production in coming years.

The big picture: The study sees worldwide industry investment in finding and developing new supplies growing for the third straight year, but with a twist.

  • "For the first time since the 2014 peak, investment in conventional resources is set to increase at a stronger pace than U.S. shale where investors prioritize capital discipline and shareholder returns," it states.

The intrigue: IEA also sees an inflection point in the shale patch. The world's largest energy companies, including Exxon, BP and Chevron, are playing a bigger role in the arena once dominated by independent companies.

Also, some of those independents are tapping the brakes on their spending levels. Add it all up and...

  • "2019 might be the first year where investment growth in shale assets passes from independents to big oil companies. This is a remarkable change for a sector which has hitherto been dominated by smaller operators," IEA said.

But, but, but: Count IEA among the mix of forecasters — both government and private — who have underestimated the extent of U.S. growth.

Consider that last year's version of the annual report saw total U.S. crude production reaching around 12 million barrels per day in 2021. Turns out the country's crude output has hit that threshold already.

Go deeper: Experts consistently underestimate U.S. oil production