Paris, Jan 19 (AFP) - The United States are set toovertake Saudi Arabia as the world's number two oil producerthis year, as shale companies, attracted by rising prices,ramp up drilling, the International Energy Agency said today.
"This year promises to be a record-setting one for theUS," the IEA wrote in its monthly market report.
Crude production of 9.9 million barrels per day (bpd) inthe US was now at the highest level in nearly 50 years,"putting it neck-and-neck with Saudi Arabia, the world'ssecond largest crude producer after Russia," the IEA said.
"Relentless growth should see the US hit historic highsabove 10 million bpd, overtaking Saudi Arabia and rivallingRussia during the course of 2018 -- provided OPEC/non-OPECrestraints remain in place," it said.
A global supply glut pushed oil prices as low as $30 perbarrel at the start of 2016.
But producing nations -- both inside and outside the OPECoil cartel -- struck a deal at the end of 2016 to cut backproduction and drive prices higher.
Geopolitical tensions and a reduction in oil stocks havealso contributed to the recovery.
Crude recently rose above $70 per barrel for the firsttime since 2014 after OPEC and non-OPEC countries agreed toextend their combined cutbacks until the end of this year.
Rising prices have, in turn, made it more attractive forshale companies to increase drilling.
And since the United States is not a party to the deal,its shale production can continue uninhibited.
"US growth in 2017 beat all expectations ... as the shaleindustry bounced back, profiting from cost cuts, (and) steppedup drilling activity," the IEA said.
"Explosive growth in the US and substantial gains inCanada and Brazil will far outweigh potentially steep declinesin Venezuela and Mexico," it said.
"The big 2018 supply story is unfolding fast in theAmericas," the IEA said.
Shale production is controversial, because in order toextract oil and gas, a high-pressure mixture of water, sandand chemicals is blasted deep underground to releasehydrocarbons trapped between layers of rock.
And environmentalists argue that the process -- known asfracking, or hydraulic fracturing technology -- maycontaminate ground water and even cause small earthquakes.
Turning to OPEC output, the IEA said that there was "noclear sign yet of OPEC turning up the taps to cool down oil'srally".
In its own montly market report published yesterday, theOrganization of Petroleum Exporting Countries had said thatthe global oil market was moving closer to reaching a healthybalance between supply and demand.(AFP)AMS.
This is unedited, unformatted feed from the Press Trust of India wire.