Oil Reserve vs. Oil Production

Posted by Oilism.com on October 25th, 2007 at 04:46pm

The question to the continously oil price increase and the speed by what this happens coincides closely with the economic growth. The oil industry has appeared to be able to discover new reserves and as a result, the stock level kept in place, in spite of the increased demand for crude oil during the previous years. Though there are reasons enough for to concern.

The oil industry has already indicated that she is no longer able to discover new reserves and get these new plants fast enough in production to pump up the crude oil to keep the speed as before.

The time in which new reserves could become against relatively restricted production costs are definitely send to the past.

New reserves are more and more discovered at difficult places and the production goes accompanied by technological problems which cost very much!

It is known that the middle of east contains the largest oil reserves of the world. In the current production speed the Middle East region can still live 90 years of these reserves, with these figures she stands way above the other regions. On a good 2^nd place comes forward South/Central America that still has 40 years to go on its oil reserves. Africa comes on the third place where a country as Nigeria has the largest reserve. Then Europe comes on a fourth place if Russia is also counted, that has an important and big reserve. On the 5^th place the region Asia-Pacific and on the last place North America.

The official oil reserves have grown in the period from 1995 up to 2007 with 17%, whereas the production in the same period has grown by 19%.

Evolution

At this moment there is still no shortage of oil although that threat arises in the future. Even without an oil shortage, crude oil increased strongly to a top of more than 90 dollars in September 2007.

Now the oil reserve is no longer increasing and in the future gradually reduces, it can be expected that the price of crude oil will become more volatile. The peak oil prices will get stable on higher levels. Beside the increasing shortage for oil the delivery of additional oil reserves will considerably more precious than in the past. Countries such as Saudi Arabia, Iran and Iraq which has the largest reserves, can produce against relatively low costs and have sufficient surplus to export oil.

Due the strong economic growth of the last years and consequently strong demand increase for finished refined oil products, the refineries occupancy has been very high last years. It costs a lot of time to develop an oil refinery, getting a license and building takes years. This resulted in enormous profits for the refineries. A situation which changes if the price of crude oil (temporarily) decreases by a delay in the economic growth. Especially if that delay takes place in countries which have a large oil usage, such as the United States and China.

Supply and demand

The Middle East is with 19.821 million barrels by far the largest exporter of crude oil and the major part of it goes direction to the Far East. Japan takes 4.269 million barrels per day, China 1.360 million barrels and the other countries in that region are together well for 7.466 million barrels per day. The former Soviet Union is the second largest exporter with 7.076 million barrels per day. The European countries are grateful consumers with 5.811 million barrels per day.

The region North-America imports 9.668 barrels per day. Canada and Mexico are exporters, whereas the United States if individual country globally largest importers are with 13.525 – 1.129 = 12.396 million barrels per day.

Conclusion

Last decades the oil industry has proven to be able to keep the reserve, in spite of the increased usage, at the same levels by discovering new oil sites. The chance that she succeeds the same job in the coming decades is much smaller; moreover the costs of winning oil from new reserves will strongly increase. By the decrease in life span of the worldwide oil reserve the price of crude oil will tend higher for the upcoming years, where considerable fluctuations can appear. If you are a commodity trader, be aware!

The Middle East has the largest oil reserve as a result of which they will be to provide the world longest with crude oil. The export of crude oil aims mainly for the Far East, which makes the rapidly growing countries from that region dependent to satisfy to their strongly increasing need for crude oil. By the increasing shortage of oil, the extremism and the many conflicts can cause geopolitical tensions in the rest of the world

Under Crude oil+ Middle East+ Oil+ Oil industry