Soaring oil production from the US is set to buoy global oil demand through 2020, but the International Energy Agency (IEA) has warned that more investment will be needed to boost supplies after that.
Rising output from the US alone will cover 80 per cent of the world's demand growth over the next two years, according to the IEA's five-year oil market forecast.
US production is set to grow by 3.7m barrels per day (bpd) over the next five years as producers take advantage of higher oil prices, which were boosted by a landmark deal between the Organisation of Petroleum Exporting Countries (Opec) and non-Opec nations to curb output to reduce the global glut.
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However, despite rising prices, the IEA noted that the oil industry has yet to recover from the "unprecedented" two-year drop in investment following the oil price crashing in mid-2014.
The Paris-based agency saw little to no increase in spending on exploration outside the US in 2017 and 2018, and warned that additional investment will be needed to spur supply growth after 2020.
"The United States is set to put its stamp on global oil markets for the next five years," said Fatih Birol, the IEA's executive director.
"But as we've highlighted repeatedly, the weak global investment picture remains a source of concern. More investments will be needed to make up for declining oil fields – the world needs to replace 3m bpd of declines each year, the equivalent of the North Sea – while also meeting robust demand growth."
The IEA expects global oil demand to increase by 6.9m bpd by 2023 to 104.7m bpd, with China driving demand growth.