The battle over access to crude oil has been front-page news recently. Sanctions against Russia have cut its exports. This, in turn, has made the price of oil rocket above $100, which is near a record set just over a decade ago. The COVID-19 pandemic in China has dropped global demand recently, This has helped oil prices fall. Additionally, the Biden Administration will release one million barrels a day from the U.S. Strategic Petroleum Reserve. This will go on for six months, and some American allies have announced they will do the same.
The amount of oil a country has can be measured in two ways. The first is how much each produces. The U.S. produces 11,567,000 barrels a day. It is followed by Russia at 10,503,000, and Saudi Arabia at 10,225,000. These production levels are key to which countries control the world’s oil, and which have surpluses they can export.
There is another way to measure oil by country. This is based on what is known as “proven oil reserves”. Investopedia defines this term as “…the quantity of natural resources that a company reasonably expects to extract from a given formation.” The figure is based on complex tests done by geologists and other experts.
Notably, some of the countries based on these reserves, with the most oil are not the largest producers. Not every country has sophisticated and well-funded oil industries like the U.S. and Saudi Arabia. These countries may face challenges finding, drilling, and producing crude.
The country with the largest proven oil reserves is Venezuela at 304 billion barrels which are about 17% of the global total.
Venezuela is followed by Saudi Arabia at 298 billion barrels. The U.S. ranks ninth at 69 billion barrels.
Venezuela has a serious production problem. Much of it is due to the fact that the country is poor, the government corrupt, and its old infrastructure. The Wall Street Journal reports: “Rusted and frequently damaged oil pipelines carry a fraction of the crude they once could. Rigs that once dotted the landscape in the country’s oil-rich sectors have gone quiet”.
It will take years to increase Venezuela’s capacity to produce oil with modern equipment. And this means joint ventures with the largest oil companies, which include a number from the U.S. That in turn, will be difficult while the corrupt government of Nicolás Maduro Moros is in power. And, he is a dictator who could be in office for years.
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