Summary of modern history of oil: -

Who Controls The World's Oil?

The answer to the question posed is a tricky one. If we simplistically look at proven oil reserves, the answer is obvious: mostly OPEC and Russia. According to BP, the global authority on the subject, this collective group of 16 countries owns 1.35 trillion barrels of proven oil reserves, or nearly 80 percent of the world’s total. Yet to be sure, there are outside questions as to how much oil OPEC in particular actually has. Unlike the U.S. reserves, which get monitored by the Securities and Exchange Commission, those in OPEC’s Member Countries are not independently verified. In short, BP and other reporting agencies must simply take them at face value.

In any event, reserves are just a subset of the much larger oil resource. They represent how much oil can be produced today under prevailing prices and technologies. Both of these factors are always in flux, however, and their changes can lift more of the resource into the reserve category. For example, although recognized for holding 10 percent of the world’s proven oil, most of Canada’s massive oil sands deposits in Alberta only become accessible if prices are high enough. In the U.S., the emergence of shale shows how oil that was unavailable just a few years ago can become reachable as extraction technologies relentlessly advance. The EIA reports that the world has 420 billion barrels of recoverable tight oil, potentially offering other nations such as Argentina and China, for instance, a chance at better control.

The next assessment in global oil control is the actual production of the commodity itself. Not surprisingly, OPEC and Russia control 50-55 percent of all output. Even with the U.S. shale revolution, the influence of this bloc remains undeniable: its 1.2 million b/d production cut agreement has put a floor under the global market. Even more importantly, Russia and OPEC’s de facto leader Saudi Arabia control a combined 25-30 percent of all exports. This is essential leverage for these two oil-obsessed nations because nearly 75 percent of total oil usage is internationally traded. But, as the world’s largest liquids producer at 15-16 million b/d, huge export plans for the U.S. will give the country a firmer grip on the global market. Also giving the U.S. outsized influence is the fact that its dollar is the global currency used in trading oil.

Indeed, America’s shale boom will continue to act as a counterweight to OPEC and Russian control. A clear example of rising U.S. influence was the recent drone attacks on Saudi Arabia’s oil facilities, where 5 percent of the world’s supply was quickly taken offline. Prices did jump 15 percent but pulled back again in a matter of days. That is because ongoing record U.S. crude production has helped make the global market less vulnerable to price shocks. Looking ahead, the surging Permian basin has the U.S. expected to account for at least 80 percent of new oil supply over the next five years or even beyond. There cannot be any production cut deal here, of course, or producers would face collusion charges from the federal government.

Regardless of who controls the world’s oil, however, we know that new investments in finding and producing more are required. Oil is the world’s most vital fuel with no significant substitute, making new demand a constant reality. One primary problem is that the oil industry has delayed and/or canceled numerous mid- and large-scale projects, especially during the 2014-2017 price collapse. To avoid a potential shortfall and price spike, IEA estimates that some $700 billion is needed in annual E&P spending for decades to come. All investments are important because oil is the ultimate global commodity, where events in one country can negatively impact the market everywhere. Thus, more control over the world’s oil will be granted to those nations that invest the most in new production.

How Much Oil Is Left On Earth?

The total estimated amount of oil in an oil reservoir, including both producible and non-producible oil, is called oil in place. However, because of reservoir characteristics and limitations in petroleum extraction technologies, only a fraction of this oil can be brought to the surface, and it is only this producible fraction that is considered to be reserves. The ratio of reserves to the total amount of oil in a particular reservoir is called the recovery factor. Determining a recovery factor for a given field depends on several features of the operation, including method of oil recovery used and technological developments.

Based on data from OPEC at the beginning of 2013 the highest proved oil reserves including non-conventional oil deposits are in Venezuela (20% of global reserves), Saudi Arabia (18% of global reserves), Canada (13% of global reserves), and Iran (15%).

Because the geology of the subsurface cannot be examined directly, indirect techniques must be used to estimate the size and recoverability of the resource. While new technologies have increased the accuracy of these techniques, significant uncertainties still remain. In general, most early estimates of the reserves of an oil field are conservative and tend to grow with time. This phenomenon is called reserves growth.

Many oil-producing nations do not reveal their reservoir engineering field data and instead provide unaudited claims for their oil reserves. The numbers disclosed by some national governments are suspected of being manipulated for political reasons.

Check this out: -

https://www.worldometers.info/oil/#:~:text=There%20are%201.65%20trillion%20barrels,levels%20and%20excluding%20unproven%20reserves).

Here’s What Drives The Price Of Oil

Oil prices are influenced by three major factors: supply, demand and geopolitics.

1. Supply

Supply and demand has to do with how much oil is available.

Supply has historically been determined by countries that are part of OPEC. But now, the United States is playing a bigger role in supply thanks to booming production from American shale fields. So if major oil-producing countries are pumping out a lot of crude, the supply will be high.

Just look at what happened in 2014.

“Saudi Arabia made the decision that they were not going to cut back production, they were going to continue to produce at record high levels,” said Tamar Essner, senior energy director at Nasdaq IR Solutions.

“At the same time, you had very robust output from the United States, and from other producers around the world.”

Oil prices fell sharply as producers pumped more than the world could consume. OPEC was largely blamed for the free fall in oil prices because it refused to cut down its production. But OPEC said U.S. shale drillers were to blame for pumping too much, and should cut their production first.

In 1973, Arab members of OPEC put an embargo against the United States as a retaliatory measure for U.S. support of Israel during the Yom Kippur War. After the embargo, the oil supply in the U.S. was so scarce and the demand was so high, it drove the price of crude to the point that gas stations began rationing gasoline.

2. Demand

Demand on the other hand is determined by how much need there is for oil at a given time. That need is often for things like heat, electricity and transportation. The more economic growth a region sees, the more demand there will be for oil.

“Economies around the world have picked up since the financial crisis, and growth has gotten stronger so people have been using more energy,” Essner said.

And then there’s the question of how the market will react to renewable energy.

“A lot of this will be impacted by public policy, but at the end of the day renewable can only displace hydrocarbons if it’s economically feasible,” Essner said.

“Right now, renewables are still more expensive than hydrocarbons, so consumers aren’t going to voluntarily make the switch.”

3. Geopolitics

Since supply is determined by the big oil-producing countries, tension with one of those nations can cause major problems. So if there’s war or conflict in an oil-producing region, crude inventories could seem threatened, and that could ultimately alter the price of oil.

“Geopolitics has traditionally been a factor in the oil price,” Essner said.

“Particularly when situations in the Middle East or other oil-rich regions of the world would flare up and there would be conflict, you would generally speaking see a little bit of an uptick in the price of oil as a result, just by virtue of the risk of supply being disrupted, or of means of transportation being disrupted, such as a canal or pipeline or workers going on protest, things like that.”

Just think back to the Gulf War of 1991. Oil production fell, which caused prices to rise.

And in 2003, oil prices soared after the U.S. invaded Iraq. That Middle Eastern nation produces a lot of oil, and with instability in the region, people weren’t immediately sure what would happen to the supply.

More recently, when Trump pulled out of the Iran nuclear deal and restored sanctions on Iranian oil exports, crude prices hit 3 ½-year highs.

“That’s what makes the oil markets so fascinating, is that it’s really a very interesting interplay of financial markets, the economy, and those are two very different things, the currency market, geopolitics and the environment,” Essner said.

The energy industry is sure to evolve, and experts are watching to see what role oil will play in the future. But for now, the oil markets remain a powerful force in the world of economics, geopolitics and your commuting budget.