The world's oil map is being redrawn in ways that will pose major challenges to Canadian crude producers, energy consumers and governments.

North America is now the fastest-growing source of crude outside of OPEC, but virtually all the demand growth is in Asia. The refining industry in the developed world is aged and inefficient, and forced to compete with new mega-refineries in China, India and the Middle East. And consumers are buffeted by shifting market forces that will result in tremendous volatility in gasoline prices.

That's the picture painted Friday by the International Energy Agency, the Paris-based agency that advises rich countries on energy markets.

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And it goes a long way toward explaining the upheaval on the Canadian oil scene: the battles over proliferating pipeline projects; the trade-promotion trips by Prime Minister Stephen Harper and his ministers to China and India; and the huge interest by Asian state-owned companies in acquiring assets in the oil sands. It also sheds some light on the seemingly inexplicable changes in retail gasoline prices.

"The global oil market is entering a period of major transformation on many levels – from the early stages of upstream through the downstream," IEA executive director Maria van der Hoeven said in a conference call Friday, after the agency released its medium-term oil market report.

The most dramatic change to the global oil map is the boom in the United States, with the "light, tight oil" that is now being produced in North Dakota's Bakken field and Texas' Permian and Eagle Ford plays. The IEA forecasts that the U.S. will increase its production by 3.3 million barrels per day over the next five years to 11.4 million barrels, a level that exceeds the current output of Saudi Arabia.

And it expects Canada's oil production to grow by 1.1 million barrels a day, primarily from the oil sands. Domestic oil production was about 3 million barrels a day last year.

But the agency warns that Alberta producers face major challenges, not the least of which is the twin threat in the U.S. market of sluggish demand and the surging American production filling up available pipeline space. The key message on its oil sands forecast: "Transport bottlenecks dent Canadian unconventional growth."

The Harper government has been seized with the rise of Asia and its energy-hungry economies. Indeed, Natural Resources Minister Joe Oliver travelled to India this week to promote greater exports of oil and gas to the subcontinent, and to look for more investment from Indian firms in the Canadian energy sector.

Still, the Conservative government is largely content to let market forces – and the provinces – determine how Canada will respond to the tectonic shifts that are now transforming the sector, one that the Prime Minister himself has declared to be a strategic strength for the country.

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But Mr. Harper has rejected calls from provincial premiers for a national strategy that would confront the challenges head on, and heaped scorn on political opponents like NDP Leader Thomas Mulcair who want Ottawa to intervene more forcefully in the marketplace to re-balance resulting regional disparities and ensure Canadians reap the most value from the country's oil production.

The Paris-based IEA buttressed the argument used by the Conservative government and the industry to deflect calls for punitive environmental regulations that would limit expansion in the oil sands. Despite efforts to wean the world off fossil fuels, oil will remain the dominant energy source for the foreseeable fuel, and the oil sands are an important source of new supply, the agency said.

Yet oil producers face lower-than-expected growth in consumption right across the world, but especially in the developed world. Partly, that reflects slower economic growth. But the IEA also expects the oil intensity – the amount of energy burned per unit of gross domestic product – to improve by 2.5 per cent over the next five years, as consumers embrace fuel efficiency.

So while the market is challenged by tectonic shifts, there will be plenty of crude to grease the wheels.