North American crude oil production sends supply shockwave through worldwide market, IEA says

A crude oil supply shockwave created by a surge in North American oil production will be as transformative to the worldwide market over the next five years as was the rise of Chinese demand over the past 15 years, according to a report released today by the International Energy Agency (IEA).

The agency's annual "Medium-Term Oil Market Report" states the shift will not only cause oil companies to overhaul their global investment strategies, but also reshape the way oil is transported, stored and refined.

The effects of continued growth in the North American supply — led by U.S. light oil and Canadian oil sands production — will cascade through the global oil market, the report states.

"Although shale oil development outside North America may not be a large-scale reality during the report's five-year timeframe, the technologies responsible for the boom will increase production from mature, conventional fields, causing companies to reconsider investments in higher-risk areas," IEA officials said in a press release.

European refiners will see no let-up from a squeeze caused by increasing U.S. exports, and new Asian and Middle Eastern refiners. Having helped offset record supply disruptions in 2012, North American supplies are expected to continue to compensate for declines and delays elsewhere, but only if necessary infrastructure is put in place, the report states.

"North America has set off a supply shock that is sending ripples throughout the world," said IEA Executive Director Maria van der Hoeven. "The good news is that this is helping to ease a market that was relatively tight for several years. The technology that unlocked the bonanza in places like North Dakota can and will be applied elsewhere, potentially leading to a broad reassessment of reserves."

The IEA aims to ensure a supply of reliable, affordable and clean energy for its 28 member countries.