IEA forecasts supply shock to reshape oil markets

PARIS - The supply shock caused by the North American oil production booming in the next five years will not only have impact on global investment but also reshape transportation, storage and refinery of oil, the International Energy Agency (IEA) said Tuesday.

"North American supply growth now looks higher than expected in both absolute and relative terms," IEA Executive Director Maria van der Hoeven said when launching the organization's annual Medium-Term Oil Market Report (MTOMR).

"North America has set off a supply shock that is sending ripples throughout the world," the IEA chief said.

The supply shock plays a real "game changer" in every way, "not just because of the volumetric growth involved, but for a host of compounding reasons," she explained, given a few factors that will compound the impact of this new American supply: crude quality, infrastructure requirements, current regulations, and the potential for replication elsewhere.

All these factors, including technologies and investment, "are forcing a series of chain reactions that will leave very few links in the global oil supply chain unaffected," she said.

In its latest report, the IEA sees the supply shock "good news" because it helps "to ease a market that was relatively tight for several years."