Special to WorldTribune.com

Saudi Arabia’s continued flooding of the crude oil market has ushered in cheap prices that could stop the U.S. shale energy industry’s growth in its tracks, according to the International Energy Agency (IEA).

High-cost producers like U.S. shale drillers are likely to see the biggest drop in output in nearly a quarter century, the IEA said in its monthly report on Sept. 11.

“U.S. oil production is likely to bear the brunt of an oil price decline that has already wiped half the value off” the main international oil contract, the IEA said.

“After expanding by a record 1.7 million barrels per day in 2014, the latest price rout could stop U.S. growth in its tracks.”

The IEA report said that consumers are gobbling up the cheap crude as oil demand growth is set to hit a five-year high this year. Crude prices, which only two years ago were topping $100 per barrel, slumped below the $40 mark at one point this year as the Saudis have refused to cut production.

The IEA forecast global oil output may drop by half a million barrels per day next year, the biggest decline in 24 years. U.S. shale producers are seen accounting for four-fifths of that drop.

“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 IEA report said.

While it had previously expected U.S. shale output to rebound next year, the IEA said “the latest price rout takes 2016 futures prices below the average break-even cost for all major shale plays” and as such “the current slump in drilling and completion rates is expected to extend well into next year.”

U.S. oil output fell for the fifth week in a row in the week of Sept. 4, dropping to 9.14 million barrels per day, according to the U.S. Department of Energy.

The IEA noted that the low prices were hurting not only U.S. producers, but those in Russia and the North Sea. Low prices were also putting high-cost projects in OPEC countries at risk, it added.

  Excessive Saudi oil output puts the squeeze on U.S. shale energy industry, International Energy Agency, OPEC, WorldTribune.com