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What can and could be the driving force behind oil’s next surge. In the end the oil market is a dynamic with Russia , with its vast oil, diamond and gold reserves that is the missing card.
The supply chain from the oil well has never been tighter. The International Energy Association sees global oil demand totaling 86.1 million barrels a day ( bpd). That implies year over growth in oil demand of 2 %. The world suppliers ( OPEC supplies 40% of the world’s oil) are currently producing 85 million barrels per day.
Spare petroleum capacity according to the IEA , is capacity that can be turned on for 30 days and sustained for 90 days.
A comfortable level of spare global oil capacity would be five or six million barrels per day. Recently that number has been less than three million bpd. And one to two million bpd of that spare capacity in Saudia Arabia.
Before 1970 , the U.S. had spare capacity. The once rich West Texas oil fields are now populated by thousands of low volume stripper wells.
Indeed there are possibilities that countries that say that they have spare capacity - particularily Saudi and Kuwait- may be overstating their reserves.
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