In its latest monthly report, the International Energy Agency (IEA) said it expects “explosive” growth in US oil output as prices reach three year highs.
The Agency said the such a rapid growth in output risks offsetting a greater collapse of Venezuelan production and undoing the success of the OPEC cuts that led to the erosion of stockpiles.
As a result of this, OPEC have increased its forecast for oil supply in non-OPEC countries from 990,000 barrels per day (bpd) to 1.15 million bpd.
In the report, the IEA also suggested that 2018 could be a “volatile” year with high levels of geopolitical uncertainties.
It said: “The big 2018 supply story is unfolding fast in the Americas,” adding: “Explosive growth in the U.S. and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico.”
The IEA increased it forecast for US production by 240,000 bpd to 1.35 million barrels, which puts the country set to overtake Saudi Arabia and Russia.
However, the organisation does not see OPEC turning its back on the deal to cut production.
The bloc will meet with its partners over to review its strategy with most agreeing the deal must continue, while Russia have suggested it may drop out of the agreement.