Non-Opec supply to drop most in 24 years: UpdateOREANDA-NEWS. September 16, 2015. Latest dip in oil prices is likely to reduce non-Opec supply by nearly 500,000 b/d next year compared with 2015, the sharpest fall since 1992 after the collapse of the Former Soviet Union, according to the IEA. And demand growth is projected to be robust, pulling the call on Opec crude sharply higher.

The oil price drop is "closing down high-cost production, from Eagle Ford in Texas to Russia and the North Sea", the agency said. It expects US oil production to be hit hard, predicting that "US light tight oil supply, the engine of US production growth, could sink by nearly 400,000 b/d next year as oil's rout extends a slump in drilling and completion rates".

Lower output in Russia and structural declines in the North Sea are also expected to contribute to the fall in non-Opec production, to 57.7mn b/d from about 58.1mn b/d in 2015. Non-Opec output stood at 57mn b/d last year. Last month, the IEA expected next year's non-Opec production to fall only by about 200,000 b/d.

"On the face of it, the Saudi-led Opec strategy to defend market share regardless of price appears to be having the intended effect of driving out costly, "inefficient" production," the energy watchdog said in its monthly Oil Market Report (OMR). High-cost projects in Opec nations are also at risk of being hit by lower oil prices, it added.

The IEA sees the call on Opec crude at 31.3mn b/d next year, up from 30.8mn b/d forecast last month and an increase of 1.6mn b/d compared with 2015. The higher call comes on the back of lower non-Opec supply projections and global demand growth accelerating to a five-year high of 1.7mn b/d this year, from 1.6mn b/d expected in August and paring only slightly to an above-trend of 1.4mn b/d in 2016 thanks to cheaper oil and a stronger global economy.

"The sizeable anticipated loss of overall non-Opec output and robust demand growth suggest that unless prices recover, lower-cost Opec producers would need to turn up the taps during the second half of 2016 to keep the market in balance," the IEA said. It forecasts call on Opec crude at 32mn b/d in the second half of next year, 1.3mn b/d higher than in the first half.

Global consumption is set to average 94.4mn b/d this year and 95.8mn b/d in 2016, representing increases of about 200,000 b/d in each year compared with the previous forecast, the IEA said.