The oil reserves in Saudi Arabia are proven to be some of the largest in the world. In fact, they are the second largest. They come in with over 260 billions barrels reserves. They were actually the largest before, but according to reports in 2011, Venezuela ended up surpassing them. In 2011, they had increased their supply, making them the largest.
When looking at the world view of oil, they cover about 1/5 of the total number. Most of these reserves come from large oil fields. The other supplies comes from reserves that have been around for the past few years.
Did you know that only half of the oil reserves are contained in about 8 of the oil fields? One of those fields just happens to be Ghawar Field. Did you also know there are about 70 billion barrels in reserves in this field? Most of Saudi Arabia makes their money with oil from five of these fields. About 60% comes from the Ghawar Field alone.
So let’s get into the production. Over 10 millions barrels used to be produced on any given day. That number was calculated back in 1980. Based on the readings in 2009 and beyond, the Saudi oil production has increased to over 114 billion barrels per day.
But as the years go by, their oil reserves have been in decline. In fact, according to many reports, the decline of oil reserves has plummeted to as low as 40%. So what does that mean for money and how Saudi Arabia will rank in the coming years? It’s hard to say really. Though Saudi has ranked second only to Russia and Venezuela for a long time, their money ranking has gone down. Much of their foreign relations come from the production of oil. With oil production going down in recent years, those relations have also been in decline a bit.
The one thing that Saudi has on it’s side is the leverage. There aren’t many places to keep the oil reserves that are in stock. So Saudi does have leverage with that. But as the reserves go down, there isn’t much in production in certain places. Once some of those supplies dwindle down and leave, there aren’t any reserves to build up. The reserves aren’t there to take the place of what is left.
What some countries have commented on is how some suppliers have used the oil in excess. Many comes from the mentality of “we can always get more”. But that is simply not true. Once it’s gone, it’s gone. Some have taken for granted over the years how much oil has been in the reserves. Instead of having discipline in the use of the oil. they have been excessive and downright indulgent.
Another issue is the stability and the direction of the market. Some aren’t sure which markets are stable enough to give them a good price. Oil is a good investment for many. The more stable the market, the more money that can be made. The less stable the market, the less money that will be made.
With the market being so uncertain right now, many don’t know what to do. Some are pulling their money out and placing their money in other reserves. That also has an impact on the market price point for oil.
But what happens when those oil reserves are gone? What happens when the money that people make off these reserves ends? That will not only have an impact on the market, but it will also have an impact on the business that Saudi does. Saudi does business with people like the US, Russia, China, and various other places. Saudi is still a major player when it comes to the game of oil. But they do need to watch out how much they play.
Their economy may be somewhat stable now, but who knows how long they can sustain that. In the long run, not only will their business dealings take a hit, but their investments will also take a hit both home and abroad.