U.S. to Become Largest Oil Producer by 2015

America will surpass Saudi Arabia and Russia to become the world's largest petroleum producer in two years, predicts the Paris-based International Energy Agency.

IEA's annual report says the U.S. will be able to meet almost all its energy needs from domestic sources by 2035 through energy efficiency and increased oil and gas production.

The report also says worldwide energy demand will jump by one-third by 2035, mainly because of growth in Asia. China is the region's primary driver today. But IEA predicts India and ASEAN will emerge as the biggest growth engines there in the next decade.

The agency notes that Brazil's ethanol-based transportation system makes the country one of the least carbon-intensive countries in spite of an expected 80% surge in energy usage by 2035.

IEA says that America's declining energy costs, especially for natural gas, will give it a significant economic advantage. The report notes that NG in the U.S. trades for one-third and one-fifth the import prices of the fuel in Europe and Japan, respectively.

IEA blames high energy prices in some markets on "pervasive" fossil-fuel subsidies that incentivized $544 billion in wasteful consumption last year. The agency says two-thirds of the economic potential for energy efficiency will remain uncaptured by 2035 unless such subsidies and other market barriers are overcome.