Worldwide Oil Supply Crisis

World oil supply is dominated by five so-called “swing” producers in the Middle East: Abu Dhabi, Iran, Iraq, Kuwait, and Saudi Arabia. Together, these countries own half the world’s yet-to-be-produced volume of conventional oil.

Consistent with the supply-disruption events of the 1970s, oil production models assume the swing producers will impose radical price increases when they supply more than 30 percent of the world's demand, leading to a worldwide plateau of demand until the swing producers' share reaches 50 percent.

By then, the swing producers themselves will all be close to their midpoint of depletion, and world production of conventional oil will have to decline. In this scenario, the models suggest the world faces a two-stage oil crisis.

Crisis Stage One - Increased Oil Prices: The first crisis is predicted by the production models to occur in the near future, when the production share of the swing producers reaches 30 percent. The swing producers then impose much higher prices, which should curb further increases in demand. The more-than-doubling of oil prices that occurred during 1999 suggests the prediction of this first crisis is turning out to be correct.

Crisis Stage Two - Permanent Production Decline: The models further predict a second crisis will occur around 2015, when physical shortages begin to appear. The cumulative production of all the swing producers themselves will then be beyond the midpoint of their total reserves, and worldwide production of conventional crude oil will lapse into permanent decline.

Potential solutions to this looming oil supply crisis are being discussed all across the world. Pursuing technology to increase heavy oil production is one of the promising solutions to the developing shortages of conventional oil supplies.