Growth in U.S. tight oil production may be limited by restrictions on crude shipments, according to the International Energy Agency.
U.S. legislation prevents “large-scale” exports and domestic refineries will be unable to absorb increasing supplies of light, tight oil that is contributing to production growth, the Paris-based agency said in a monthly report today.
“While the need for export capacity is clear, U.S. producers are hopelessly constrained in their capacity to export domestic crude,” the IEA said in its report. “The U.S. refining industry has limited capacity to absorb incremental production of light, sweet oil.”
The U.S. will become the world’s biggest oil producer for about five years starting in 2020 as tight oil production grows, the IEA said in November. Policy makers are hesitant to ease the export restrictions because of concern that domestic prices may rise, the IEA said today. Most crude produced in the U.S. requires a license to export, with the exception of oil produced in Alaska’s North Slope.