Saudi petro-producers still can't get it down

Submitted by Bill Weinberg on Thu, 04/07/2005 - 20:13

Reports the Chinese news agency Xinhua April 6:

Saudi Arabia might increase its crude reserves by 200 billion barrels, Petroleum and Mineral Resources Minister Ali bin Ibrahim al-Nuaimi was quoted by the SPA news agency as saying on Tuesday.

"There is a possibility that the kingdom will increase its reserves by around 200 billion barrels, either through new finds or by increasing what it produces from existing fields," al-Nuaimisaid at an annual meeting of graduates of the Saudi Branch of the Massachusetts Institute of Technology.

The official said Saudi Arabia currently holds 261 billion barrels of oil reserves, which is the largest in the world.


"These huge reserves enable the kingdom to remain a major oil producer for between 70 and 100 years, even if it raises its production capacity to 15 million barrels per day, which may well happen during the next 15 years," al-Nuaimi said.

Saudi Arabia currently claims a capacity of 11 million BPD, and last month produced 9.35 BPD. (Bloomberg, April 6)

However, if the "Peak Oil" theorists are correct, such attempts to stabilize unprecedentedly soaring oil prices may only be, paradoxically, fueling the spike. Under conventional wisdom, flooding the market brings down prices, and assurances of higher production soothe jitters. But if the market is really reacting to widespread fear of producers running dry, policies which will only hasten the inevitable day would also fuel the spike. Is there a vicious cycle at work here?

See our last blog post on OPEC's recent hyper-priapic tendencies.