US oil output to experience sharpest fall in 24 years says IEA

US oil output next year is to experience the sharpest fall since 1992 due to low oil prices, according to the International Energy Agency (IEA).

"Oil's price collapse is closing down high-cost production from Eagle Ford in Texas to Russia and the North Sea, which may result in the loss next year of half a million barrels a day, the biggest decline in 24 years," it said in a statement.

US oil production has reached record highs in recent years, but fracking is expensive, and extraction is only worthwhile if crude oil prices are high.

Weakening demand in industrialised countries

The price of oil has taken a sharp dive in recent months. From 2010 to mid-2014, the average price of a barrel of oil was around $110 (£71) but the remainder of last year and 2015 saw prices plummet. US crude oil has now fallen to around $45 a barrel.

This is due to a growing oversupply due to weakening demand in industrialised countries following the financial crisis.

Opec opposes cuts in production

The glut has prompted a number of meetings between members of the Organization of Petroleum Exporting Countries (Opec). Nations such as Saudi Arabia and non-member Russia opposed a cut in production to boost prices and the production levels were maintained.

Saudi Arabia's representative at the Opec, Mohammed al-Madi, denied that Saudi Arabia's oil policy had a "political dimension".

The Saudi representative for Opec said: "There isn't any political dimension in what we do at the oil ministry – our vision is commercial and economic… We are not against anybody or against the [production of US shale gas]. On the contrary we welcome it, as it balances the market in the long run."

The International Energy Agency expects that world oil stocks will continue to build until at least the end of 2016, with US oil production dropping by 0.4 million barrels a day in 2016. It grew by 1.7 million barrels a day last year.