Oil around the world

“Oil is a natural resource formed by the decay of organic matter over millions of years. And like many other natural resources, oil cannot be produced, only extracted where it already exists. Unlike every other natural resource, oil is the lifeblood of the global economy.

The world derives over a third of its total energy production from oil, more than any other source by far. As a result, the countries that control the world’s oil reserves often have disproportionate geopolitical and economic power.”

A few indicative pointers to map out the space:

Oil produced in the world: on average ~89 million barrels a day (2021). Of this crude oil is ~77 million barrels per day, rest is natural gas liquids. Natural Gas as Gas is measured separately – not detailed here. From here
USA, Russia and Saudi Arabia are the only three countries in the world producing more than 10 million barrels per day of oil & gas. US is by far the largest producer: 16.6k barrels per day or 18.5% of global production (The reserves are higher in other countries, but the production levels of these three countries is highest). The next few are Canada, Iraq, China, UAE, Brazil, Iran, Kuwait. Between themselves, the Middle Eastern countries account for 31% of global production.
Total world oil reserves are around 1.66 trillion barrels.
Venezuela has the highest proven oil reserves in the world. (303 billion barrels, or ~18% of global total reserves). Next is Saudi Arabia (266 billion barrels), Canada (169 billion barrels), followed by Iran, Iraq, Russia, Kuwait, UAE, US, Libya. Between them, 15 countries hold ~95% of world’s oil reserves.
Oil consumption in the world: 97 million barrels per day or 35 billion barrels per year. (20% of this is consumed by the US). This implies at current consumption rates, 47 years of oil reserves.

(More lists can be accessed here, here and here)

Apart from the consumption figures vis-a-vis Oil reserves, the fact that stands out for me is that USA is the largest producer and consumer of oil. This is one of those points where the general impression one has is different from reality (for me, personally). And then one wonders, how much reality is an impression created by the environment, by the media and how much of it stands the test of factual piecing together. Perhaps because Middle East as a region has the highest output of oil, and a lot more of the economic dependence on oil than other regions, the impression of oil is tied up with Middle East.

In the US oil production began already in 1859. In Russia even earlier in 1843. Saudi Arabia began production in 1938.

Following chart from here.

USA is not only the biggest producer at the moment, but it has generally been the largest oil producer ever since oil production started (in mid 1800s). So of the global oil ever produced, USA has been one of the largest producers. In consumption as well, US seems to have a disproportionate share – ~20% of the global production.

A few other pointers that throw some light on the oil sector:

Oil Rents – Since oil is available and extracted in different ways in different countries, the cost of extraction varies. Oil Rent or Economic Rent is the difference between the cost of production and oil revenue (or local output at regional prices). It signifies the profit levels for the countries at local prices. For countries where oil can be extracted at low cost, oil rent is generally high compared to countries where extraction is expensive (say, offshore oil). This here breaks down the barrel costs in a few countries. For example, UK has some of the highest production costs since the oil and gas is in deep sea stormy waters. Middle Eastern countries have some of the lowest production costs.

Generally, an indicator of Oil Rent as a % of GDP is often used to appreciate the dependence of an economy on oil. Here, it can be explored further. The numbers are much higher in Middle East (in 20s-30s%).

Why is oil rent relevant? Following from here:

Accounting for the contribution of natural resources to economic output is important in building an analytical framework for sustainable development. In some countries earnings from natural resources, especially from fossil fuels and minerals, account for a sizable share of GDP, and much of these earnings come in the form of economic rents – revenues above the cost of extracting the resources. Natural resources give rise to economic rents because they are not produced. For produced goods and services competitive forces expand supply until economic profits are driven to zero, but natural resources in fixed supply often command returns well in excess of their cost of production. Rents from nonrenewable resources – fossil fuels and minerals – as well as rents from overharvesting of forests indicate the liquidation of a country’s capital stock. When countries use such rents to support current consumption rather than to invest in new capital to replace what is being used up, they are, in effect, borrowing against their future.

This opens up a much wider discussion around resources, dependence on resources and the differences between countries in managing oil wealth. Some countries rely heavily on oil or resource wealth, and some have a much diversified economy. The way oil or resource wealth is managed varies around the world. Some models seem to be more cognizant of the non-renewable nature of resources and share the wealth with future generations. (To be further explored).