Before we begin to look at the issues of Oil Supply, it may be instructive to give an idea of just how much oil we currently use globally.

Every day, the world extracts and uses around 85m barrels of oil. Over a year this equates to approximately 30 billion barrels, a truly awesome enterprise. Think of it like this. A barrel of oil contains about 159 liters of oil and stands about 0.8m high. If you laid 30 billion barrels end-to-end, it would reach from here to the moon…..69 times!!

85m barrels per day is equivalent to 158,000 litres per second or about 72% of the flow of Taupo's Huka Falls. Imagine that!

Below is a table of the world’s pre-eminent producers and exporters of oil (all figures measured in millions of barrels of oil per day). Latest available figures.

 Three of the 8 major oil exporters are in documented decline (Kuwait, UAE, Norway) whilst a further two have (arguably) very recently passed their peak (Saudi Arabia and Russia).

The world is increasingly reliant on the Middle East as a source of global oil. However, of the 11 countries in the Middle East, only 5 are significant oil producers. Jointly they are known as the ‘Middle East 5’ – Iran, Iraq, Kuwait, UAE and Saudi Arabia. Together they produce around 20m barrels a day or a little under a quarter of global production.

Beyond the Middle East 5 are the ‘Alternative Eight’ – Nigeria, Angola, Russia, Kazakhstan, Azerbaijan, Columbia, Venezuela and Mexico. These countries and/or their oil industries are characterised by one or all of the following attributes: corruption, organised crime, civil war, political turmoil, ruthless dictatorships or they are beyond their peak with declining production.

Some interesting and worrying facts relating to the global supply of oil:

• 80% of world production comes from fields discovered prior to 1973.
• The world has 45,000 producing oil fields but the Top 100 by size account for 50% of global reserves (with only 2 of these fields having been found since 1970).
• Once 12 fields produced over a million b/d. Due to the ongoing, precipitous collapse of the Cantarell field in Mexico, there are now only 3 of this size.
• For every 4 barrels we use today, we replace it with 1.
• Fifty years ago, the world discovered 30 billion barrels per year and produced 4 billion. In 2005, the inverse became true
• Saudi Arabia is critical to the global supply picture, yet 90% of Saudi production comes from 7 fields that are on average 51 yrs old (The largest field by far Ghawar represents half of Saudi Arabian reserves and half their production).

The weight of evidence, in our view, leads us to believe that global oil production has either peaked or will peak in the next few years i.e. the global production of oil is entering a period of terminal decline which is impossible to reverse.

Further, this terminal decline coincides with a period in history when the global appetite for oil is gathering pace!