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© OECD/IEA 2014

Tight oil production is making the United States the largest oil producer in the world – and it stays that

way in our projections until the late 2020s. But, by then, US production is already starting to fall back

and, by 2040, output is back to where it is today. Instead, it is the oil sands in Canada that takes over as

the main source of North American supply growth, assuming that a way can be found to bring this oil to

market. The other major non-OPEC source of supply growth is Brazil, with its prolific, complex and

capital-intensive deepwater fields – where delay is an ever-present risk. These suppliers do a lot to

satisfy growing demand over the period to 2020, but after this, there is a large and growing gap in the

market.

This is the gap that needs to be filled by the only remaining large source of low-cost oil, the Middle

East.

More than half of this growth comes only from one country, Iraq. There is no shortage of resources to

meet this challenge. But, looking at the turmoil in parts of the Middle East today, there is a real concern

about a shortfall in investment.

This is a decade away, but we should not be lulled into a false sense of security. To be producing extra

barrels in the 2020s requires investment today. Aside from the obvious security concerns in parts of the

region, there are also fiscal and demographic pressures that could squeeze the funds available for the

upstream.

What would be the implications of a shortfall in investment? Tighter markets and higher prices. The

effects would be felt around the world. But vulnerability would be particularly acute in those countries

that are actually looking for these extra barrels.

First among the sources of demand growth are the large importers in Asia, notably China, but also India

and others. By 2040, two out of every three barrels of crude oil that are traded internationally –

including 90 percent of Middle East exports – will be heading for Asia.

But for today, there is plenty of supply, and prices are low.

As you are all well aware, following three consecutive years of prices above 100 dollars, the price of

Brent crude has fallen by almost 30 percent since the middle of this year.

Buoyant supply from North America has been instrumental in bringing prices down. What remains to be

seen is for how long this supply can keep prices at or around today’s levels.

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energy system. And I have not even had time to discuss energy poverty, and the remarkable impact that

energy demand growth will have in Sub-Saharan Africa and South Asia over the coming decades.

All of these issues present us with uncertainties.

However there is one thing of which we can be certain. Countries will always require energy, and the

ways in which we generate, transport, and use this energy may not be the same tomorrow as they are

today. Being vigilant, having foresight, and ensuring energy security today is the best way to stay

prepared for tomorrow.