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In the old days before shale oil, most of the spending on new wells was found outside of North America. But those were the old days. By our calculation, $262 billion will be spent worldwide in 2018 drilling and completing new wells, of which 55% is in the US and Canada:

2018 Oilfield Spending (Billions)

Source: Spears & Associates' Drilling and Completion Outlook          

Source: Spears & Associates' Drilling and Completion Outlook

Part of this decline internationally comes from discounting, but the majority is tied to a lack of new well drilling and seriously reduced spending on maintenance. If oil output is to stay flat internationally, this lack of spending cannot be sustained. In fact, to maintain stable oil output internationally, every one of those regions/countries listed in the above chart will need to almost double.  

Want international oil production to rise? Not happening this decade.

Only 20-30% of the world’s oil reserves are being replaced at today’s pace of drilling activity. When this fact is married with no more space in West Texas oil pipelines, it becomes apparent that rising oil demand will not be met with rising oil output in the short term.

And then what happens to price?