Production spikes from US shale oil and Canadian oil sands have sent a supply shock through world energy markets, the International Energy Agency said in a report Tuesday.
That shock makes the oil and gas industries in the United States and some developing nations winners in the new energy environment, while Europe's, quite possibly, emerges as a loser. Separately, European officials are investigating three energy companies accused of rigging oil prices.
The benefits of the North American oil boom on this side of the Atlantic are well-documented. Elsewhere, the production surge signifies a shifting dynamic between once-dominant oil giants and developing nations asserting their presence.
“The good news is that this is helping to ease a market that was relatively tight for several years," IEA Executive Director Maria van der Hoeven said in a statement. "But as companies rethink their strategies, and as emerging economies become the leading players in the refining and demand sectors, not everyone will be a winner.”
Steep growth in non-OECD refining capacity will put refineries in traditional powerhouses at risk of closure, according to the report. Unique drilling technologies pioneered in the US will be applied elsewhere, dramatically recasting global reserve estimates. This quarter, non-OECD economies will overtake OECD nations in oil demand for the first time, IEA projects.
North American supply is expected to grow by 3.9 million barrels per day between 2012 and 2018. That's nearly two-thirds of total non-OPEC supply growth of 6 million barrels per day. The IEA has previously projected that the US will overtake Saudi Arabia as the world's largest oil producer by 2020.
Growth in OPEC production, meanwhile, is expected to slow as unrest grows in North and Sub-Saharan Africa.
Europe may bear the brunt of the supply shock.
"We’ll see some European refineries close down, and some of their needs will come from Middle East or African refineries," Tom Kloza, chief oil analyst at Oil Price Information Service, a petroleum pricing service, said in a telephone interview. "[B]etween now and next five years ... the US is in the driver’s seat."
Europeans received more bad news Tuesday when European Union antitrust authorities reported an investigation of oil market manipulation. Oil giants BP, Statoil, and Shell are accused of colluding to provide inaccurate information to Platts, a price-reporting firm.
"The prices assessed and published by Price Reporting Agencies serve as benchmarks for trade in the physical and financial derivative markets for a number of commodity products in Europe and globally," the European Commission said in a statement. "Even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels purchases and sales, potentially harming final consumers."
The companies released statements saying they were cooperating with the unannounced inspections of their offices. There is no legal deadline to complete such antitrust investigations.