Falling oil prices may cut investment in U.S. shale oil by 10 percent next year, the International Energy Agency (IEA) said on Wednesday, slowing growth in a sector that has turned the U.S. into a major global producer.
"A well-supplied oil market in the short-term should not disguise the challenges that lie ahead, as the world is set to rely more heavily on a relatively small number of producing countries," Fatih Birol, the IEA's chief economist, stated in the agency's 2014 "World Energy Outlook" published on Wednesday.
Benchmark oil prices have dropped by about 30 percent over the past four months on the back of a mounting oil glut from the Middle East and North America, which is putting pressure on oil-producing nations and oil companies.
On Wednesday, Brent crude slipped near $81 a barrel, close to a four-year low.
"If prices remain at these lows, this may result in a decline in U.S. upstream capital expenditures by 10 percent in 2015, which will have implication for future production growth," Birol told Reuters at the launch of the report.
U.S. oil production has risen by 1 million barrels per day (bpd) per year over the past year as strong oil prices led to a boom in shale oil production through fracking, a technique that uses high pressure to capture gas and oil trapped in deep rock.
Production is set to grow by an additional 963,000 bpd in 2015, according to the U.S. Energy Information Administration.
Analysts told CNBC the current decline in oil prices could start to deter investment in U.S. shale oil production immediately.
Gareth Lewis-Davies, senior oil strategist at BNP Paribas, told CNBC on Wednesday that the growth in non-OPEC supply would "stall at these low prices."
"We think current production will not be affected because the operating costs are covered but a more difficult question is the extent to which investment will be canceled or delayed as a consequence of low oil prices," he told CNBC's "Worldwide Exchange."
"At the current levels, we still see a fair amount of [U.S.] shale oil production on a full cycle -- but not all of that which is currently planned. So on that basis, the growth in non-OPEC supply will start to stall at these prices, if these low prices are sustained," he said.
Last month, the IEA's executive director Maria van der Hoeven told Reuters that "some 98 percent of crude oil and [natural gas] condensates from the United States have a breakeven price of below $80 and 82 percent had a breakeven price of $60 or lower," meaning that the U.S. shale oil producers could well cope with current lower oil prices.
The chief executive of Sweden-based petroleum company Lundin Petroleum, told CNBC that he wasn't reassured.
"When I look [at the U.S. shale industry] I see the fact that it hasn't delivered any free cash flow and it continues to eat capital. I look at the availability of capital over the last two years and I must admit, I think 'Can this continue?'," Ashley Heppenstall said, speaking to CNBC at UBS' European conference in London on Wednesday.
"We hear lots of talk of break-even prices for U.S. shale [and] at what price it's going to start to have an impact -- and I think on the margin it will already start to have an impact -- the question is how quickly and how much we will see U.S. production growth slowing."
Despite those concerns, the IEA's chief executive believed oil prices could well rise as weak prices stimulated demand.
"Given the negative impact of $80 on investments, and given the $80 positive impact on demand and oil demand growth there will be upward pressure on oil prices within a couple of years if not earlier," Birol told Reuters.
The IEA forecast global oil demand to rise from 90 million bpd in 2013 to 104 million bpd in 2040, when the energy supply mix divides into four almost-equal parts between oil, gas, coal and low-carbon sources.
Strife in the Middle East, mostly in Iraq, poses a threat to future supplies - hampering investments necessary to sustain production growth there, Birol said.