The oil market is set to open a new chapter for the global economy, with a new wave of deals to increase oil production from the Middle East, India and Europe.

The global oil market could expand by as much as 2 million barrels per day (bpd) in 2017-18 as global production is expected to surge by 1 million bpd.

The International Energy Agency (IEA) predicts a total of 9.5 million bp of global output from 2015-18.

The oil market has been rocked by a spate of oil price collapses that hit oil producers across the globe, and a slump in the value of the dollar has further dampened demand.

The IEA said global crude oil production fell by 0.8 per cent to a record 9.4 million bps in 2015-16, with China accounting for almost one-third of the fall. 

It said oil demand will expand by about 2.8 million bpm in 2017, but that will be boosted by a combination of a new boom in China, a new surge in Russia and increased output from the oil-rich US.

Oil prices have slumped in recent months amid a glut in oil, which has fuelled demand for crude in the Middle Eastern and North African countries.

The world’s oil supply peaked in late 2015 and fell to about 1.5m bpd by late 2016, but is forecast to recover to about 2m bps by 2020, the IEA forecast. 

The IESA has said the market is in a “very bad shape” and a major collapse in prices would make the oil market less competitive.

It expects that the IEO could revise the IAEA’s outlook for global oil supply to a negative one by 2021, and cut its estimate of world oil production by 0,000 bpd in 2022. 

In the US, the prospect of a major oil price collapse has caused investors to sell off assets in the global oil industry, with oil traders selling off shares in oil companies.

A global glut has hit the value for oil-related stocks in Europe, Asia and Australia, which fell more than 20 per cent in the last year.

The drop has also hit the price of Brent crude oil, the world’s most valuable crude, which was down more than 10 per cent.

A surge in production from Saudi Arabia, the US and India has also boosted global demand.