To the data itself, then, and firstly, Saudi Arabia’s crude oil reserves. In early 1989, Saudi Arabia claimed proven oil reserves of 170 billion barrels, but only a year later, and without the discovery of significant new oil fields, the official estimate of reserves had somehow increased by 51.2 percent, to 257 billion barrels. Shortly thereafter, it rose again to just over 266 billion barrels, a level that remained until a slight increase in 2017 to just over 268 billion barrels. On the other side of the supply-demand equation, from 1973 until the end of last week, Saudi Arabia pumped an average of 8.192 million barrels per day (bpd) of crude oil. Therefore, taking 1989 as a starting point (with 170 billion crude oil reserves officially claimed that year), over the next 32 years Saudi Arabia has pumped and forever removed from its oil fields a total of 95,682,560,000 barrels of crude oil. During the same period, there was no significant discovery of major new oil fields. Despite this fact, Saudi Arabia’s crude oil reserves have not declined, but have actually increased. This is a mathematical impossibility. Second, the Saudi overcapacity figures, which are a function of Riyadh not only lying about the numbers, but also engaging in semantic tricks that involve using various oil market terms interchangeably even though they don’t mean the same thing thing. To be clear here: the official Energy Information Administration (EIA) definition is very specific about what constitutes “excess capacity” in global oil markets and is as follows, directly from the EIA rules: “Excess capacity is production which can be placed online within 30 days and retained for at least 90 days.’ This is; that’s excess capacity, nothing more, nothing less. However, Saudi Arabia includes in its own use of the term “reserve capacity” every drop of crude oil it can hold: including supplies of oil in storage, supplies that can be withheld from contracts and redirected to those stored supplies , and any oil he can buy through brokers in the spot market and then sell it himself. This very semantic ploy was used to cover real supply shortfalls in the wake of the September 2019 attacks by the Iranian-backed Houthis on Saudi Arabia’s Khurais and Abqaiq facilities and subsequent attacks. In fact, as written in the 2015 book: “The country has often stated that it has excess production capacity of between 2-2.5 million barrels per day (mbpd), with the ability to increase production to around 12.5 mbpd in this case of unexpected disturbances elsewhere. However, it is highly unlikely that it could pump at these levels for an extended period of time, and this idea has been supported by comments from Gulf officials to OPEC, who said amid fears over Iraq’s bid that Saudi Arabia would could increase production by another 1-1.3 mbpd in the best case scenario. Officials also said that production of 11.5 mbpd has not been tested and could only be sustained for a very short time and that, in any case, higher production would be very difficult and would require the production of heavy crude oil.” Nothing substantial has changed since then. And third, the ridiculously inflated “production” figures that Saudi Arabia has been clinging to for years, which seem to come from the Hans Christian Andersen School of Petroleum Economics. As highlighted above and back in the 2015 book, despite all the trivial and general nonsense from the Saudis that they can “produce” 11 million bpd or 12 million with ease, and plans to “raise that” to 13 million bpd, the Saudi Saudi Arabia actually produced from 1973 to the end of last week an average of 8.192 million barrels per day (bpd) of crude oil. this is. Furthermore, as discussed before the 2015 book, it has only ever – in the history of the world, until the end of last week – managed to produce 11 million bpd and sustain it for a month on two occasions. Even when Saudi Arabia was at near-existential points in its recent history — such as the 2014-2016 oil price war it instigated to destroy or disable the then-nascent US shale oil sector, or when former US President Donald Trump threatened to withdraw military support for it if it did not increase oil production – Saudi Arabia could not increase oil production above just 10.5 million bpd for a long time. So it’s no surprise that OPEC+ decided last week not to increase production beyond what was previously agreed – because it simply can’t. Perhaps that was why neither Saudi Crown Prince Mohammed bin Salman (MbS) nor Abu Dhabi Crown Prince Mohammed bin Zayed Al Nahyan (MbZ) agreed to receive phone calls from US President Joe Biden, after all: no not because they were trying to marginalize him (although that is more than likely the case as well) but because they had nothing to offer him and were caught in a lie. This last conclusion can be drawn from subsequent remarks – broadcast to the world last week by the French president, Emmanuel Macron – that he had a call with MbZ: “He told me two things. I’m maxed out, maxed out [oil production capacity], that’s what he claims,” said the French President. “And then he said [the] The Saudis can increase by [only] 150 [thousand barrels per day]maybe a little more, but they don’t have huge capacities six months ago,” Macron concluded. By Simon Watkins for Oilprice.com More top reads from Oilprice.com:
