7
The Crude Oil Market
Russia, Saudi Arabia, and the US are the largest producers of
crude oil in 2008. The greatest concentration of production (both
oil and gas) is in the Middle East. Furthermore, since the discovery of crude oil in the late 19th century, the world has consumed
approximately 1.0 trillion (1 x 10
12
) barrels of crude oil. There are
sufficient quantities (1.0 trillion barrels) of proven conventional
crude oil reserves (determined by drilling) to meet today's global
demand for another 25 years. There are expected to be another
2 to 3 trillion barrels of unproven conventional crude oil reserves,
such as the heavy Venezuelan and Canadian crudes, and shale oil
(Chapter 9), which are together much more costly to produce than
conventional oil. So, although the world may not be approaching
peak oil (Chapter 8), it is much more likely to be approaching peak
cheap oil.
The world is depleting the reservoirs of light sweet crude oil,
which can be produced at both low costs and at low business risk.
Much of the conventional crude resource oil is located in politically
unstable countries (Russia, Middle East and West Africa), which
adds a price premium to the cost of production. Furthermore, the
193
An Introduction to Petroleum Technology, Economics, and Politics
by James G. Speight
Copyright © 2011 Scrivener Publishing LLC.
The Crude Oil Market
Russia, Saudi Arabia, and the US are the largest producers of
crude oil in 2008. The greatest concentration of production (both
oil and gas) is in the Middle East. Furthermore, since the discovery of crude oil in the late 19th century, the world has consumed
approximately 1.0 trillion (1 x 10
12
) barrels of crude oil. There are
sufficient quantities (1.0 trillion barrels) of proven conventional
crude oil reserves (determined by drilling) to meet today's global
demand for another 25 years. There are expected to be another
2 to 3 trillion barrels of unproven conventional crude oil reserves,
such as the heavy Venezuelan and Canadian crudes, and shale oil
(Chapter 9), which are together much more costly to produce than
conventional oil. So, although the world may not be approaching
peak oil (Chapter 8), it is much more likely to be approaching peak
cheap oil.
The world is depleting the reservoirs of light sweet crude oil,
which can be produced at both low costs and at low business risk.
Much of the conventional crude resource oil is located in politically
unstable countries (Russia, Middle East and West Africa), which
adds a price premium to the cost of production. Furthermore, the
193
An Introduction to Petroleum Technology, Economics, and Politics
by James G. Speight
Copyright © 2011 Scrivener Publishing LLC.