Saudi Oil Production Peak : Impact on the Oil Price & Global Oil Security

With the global economy heading towards a severe oil crunch probably by 2015 or thereabouts, an analysis of Saudi oil fundamentals is causing the world disquiet and worry bordering on panic. Oil-importing nations have long treated Saudi Arabia as an infinitely deep well of crude oil supplies. What much of this discussion ignores, however, is that Saudi oil production peaked in 2005 and has been in steady decline since then with domestic oil demand rising at an alarming rate and accounting for 33% of crude production in 2010. As a result, Saudi crude exports have already declined by 28% between 2005 and 2010 and are projected to decline further by 10% in the next 4 years. And far from having 264 billion barrels (bb), Saudi reserves are estimated at 63 bb-88 bb, based on estimated ultimate reserves of 185 bb-210 bb and a total production of 122 bb since the discovery of oil in Saudi Arabia. It now transpires that the one producer that could help mitigate the adverse impact of the impending oil crunch is not in a position to do so. As a result, the pressure on the oil price will continue unabated in coming years. This time the oil price could easily reach $150-$180/ barrel by 2015. And should serious unrest spark in Saudi Arabia, the oil price could surge to $200-300/barrel. Moving into renewables and nuclear energy for Saudi Arabia has become a necessity not a luxury