Non-OPEC oil output faces biggest drop since 1992: International Energy Agency

PARIS – Overall oil supply from non-OPEC countries could be headed for the biggest drop in more than two decades due to lower prices, but Canada’s output is expected to rise, the International Energy Agency said in a report Friday.

The IEA said total output from outside the Organization of Petroleum Exporting Countries remains on track to rise to 58.1 million barrels per day this year, but then drop by about half-a-million barrels per day in 2016.

“If it materializes, the decline in output would be the largest since 1992 — and the collapse of the former Soviet Union — when non-OPEC supplies contracted by (one million barrels per day) from the previous year,” the report said.

The agency said “light tight oil supply” in the United States — hard-to-extract sources of high-quality light crude in shale rock formations — could sink by 400,000 bpd next year due to reduced drilling and completion rates.

The IEA also estimated that at US$45 per barrel for oil, there would be 930,000 bpd of non-OPEC production that’s “at risk” of being shut in.

At US$50 per barrel, which is above recent futures prices, the risk of shut-in production would drop to 400,000 bpd — of which 250,000 is in the United States and Canada, IEA estimates.

“Despite the latest oil price rout, Albertan heavy oil supplies are nevertheless rising from the start-up of new projects long in the planning,”the report said.

The IEA forecasts Canadian oil output will average 4.46 million bpd in 2016, up from 4.31 bpd in 2015 and 4.27 bpd in 2014.

By contrast, U.S. production is expected to drop to 12.53 million in 2016 from 12.72 in 2015. At that level, next year’s U.S. production would still be above 11.96 million bpd in 2014.

Mexican production — which has been falling because of declining reserves — is expected to fall to 2.53 million bpd in 2016, from 2.6 million in 2015 and 2.8 million in 2014.

The IEA adds the decline in crude oil supply would also be partially offset by higher production of biofuels forecast for Brazil and the United States.

The IEA said supply from OPEC countries remains higher than last year, but declines in Saudi Arabia, Iraq and Angola pushed OPEC crude supply down in August to 31.6 million barrels a day.

The agency forecast growth in oil demand this year and a slight drop next year.

— With files from The Associated Press.