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A well pump works at sunset on a farm near Sweetwater, Texas. Photo: LM Otero / AP

The commentary atop the International Energy Agency's monthly oil report published Thursday is headlined "Happy New Year?" — and the question mark there matters because IEA says it might not be joyous for OPEC. That's because rising U.S. shale production is blunting efforts by the cartel and Russia to tighten the market by extending their production-limiting through the end of 2018, a decision made last month in Vienna.

Why it matters: It's another sign of how the shale surge has re-shaped global crude markets and created big challenges for petro-states including Saudi Arabia and Russia.

Notes from the report:

  • "2018 may not necessarily be a happy New Year for those who would like to see a tighter market," IEA notes.
  • The IEA says there could be a global crude surplus of 200,000 barrels per day in the first half of the year.

By the numbers: The IEA has raised its forecast for U.S. crude oil production growth to 390,000 barrels per day this year and sees it surging by another 870,000 barrels per day in 2018. Overall, they're now forecasting production growth of 1.6 million barrels per day in 2018 from non-OPEC producers worldwide — that's 200,000 barrels higher than their previous monthly report.

But their forecast for oil demand growth remains at 1.3 million barrels per day next year. They see the surplus in the first half of the year eventually giving way to a deficit of similar size in the second half, "leaving 2018 as a whole showing a closely balanced market," IEA said.

Bottom line: "A lot could change in the next few months but it looks as if the producers’ hopes for a happy New Year with de-stocking continuing into 2018 at the same 500 kb/d pace we have seen in 2017 may not be fulfilled," IEA said.

Yes, but: The report acknowledges that getting shale right is tricky business, and there's lots of discussion these days of a push for stronger returns rather than simply "headlong expansion."

  • "The flexibility and ingenuity of the shale sector raises challenges to forecasters," IEA said.

Go deeper

4 hours ago - World

Biden seeks to reboot U.S. sanctions policy

Sanctions increased under Obama and dramatically under Trump. Photo: Tom Williams/CQ Roll Call

The Biden administration is rethinking the U.S. approach to sanctions after four years of Donald Trump imposing and escalating them.

The big picture: Sanctions are among the most powerful tools the U.S. has to influence its adversaries’ behavior without using force. But they frequently fail to bring down regimes or moderate their behavior, and they can increase the suffering of civilians and resentment of the U.S.

4 hours ago - World

Merkel's farewell spoiled by Poland crisis at EU summit

One last awkward EU "family photo." Photo: John Thys/AFP via Getty Images

Angela Merkel took up her vaunted mantle as Europe's crisis manager for what could be the last time tonight, as she urged the EU to find compromise in its showdown with Poland.

Why it matters: The European Commission has threatened to withhold over $40 billion in pandemic recovery funds after Poland's constitutional tribunal — stacked with loyalists from the ruling right-wing populist party — rejected the principle that EU law has primacy over national law.

Republicans who put it all on the line

Rep. Nancy Mace speaks with reporters after voting to hold Steve Bannon in contempt of Congress. Photo: Anna Moneymaker/Getty Images

A small contingent of House Republicans risked their political futures on Thursday, they say, in the name of constitutional responsibility.

Why it matters: The nine Republicans who voted to hold former Trump aide Steve Bannon in contempt of Congress are now in peril of becoming political pariahs. They've opened themselves up to potential primary challengers and public attacks from their party's kingmaker — former President Trump.

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