While some, most notably the IEA, claim that shale oil will help the US become the largest oil producer in the world, OPEC has never really acknowledged the significance of tight oil in the US until now.
In the recently released World Oil Outlook 2012, OPEC wrote, “given recent significant increases in North American shale oil and shale gas production, it is now clear that these resources might play an increasingly important role in non-OPEC medium- and long-term supply prospects.”
This is a huge admission by OPEC, and one that could influence global oil markets, as previously OPEC has never been keen on new technologies such as frac’ing.
Caroline Bain, the lead commodities analyst for the Economist Intelligence Unit (EIU) stated that, “OPEC’s 2012 World Oil Outlook highlights the extent and severity of risks but takes a relatively benign medium-to-long-term view in its reference case. OPEC has lowered expectations of consumption, particularly in the OECD, over the next few years and expects OPEC’s contribution to global supply to remain relatively stable. The report discusses the advent of shale oil in the US, but unsurprisingly is somewhat cautious about its long-term implications, referring to resource uncertainty and rapid depletion rates as well as environmental concerns.”
Partly as a result of the increased production from the US, but also to do with the poor global economy, OPEC has revised its forecasts for crude oil demand. It expects the world to reduce its demand for oil from OPEC, down to 29.70 million barrels per day in 2016. As the report says, “this downward revision, together with updated estimates of OPEC production capacity over the medium-term, implies that OPEC crude oil spare capacity is expected to rise beyond 5 million bpd as early as 2013/2014.”