World Oil

World Oil

With the world’s increasing demand for oil there are not enough countries supplying oil to meet these demands. Right now the countries who export the most oil are Saudi Arabia, Angola, Iran, Russia, Oman, Yemen, Sudan, Congo, Indonesia and Equatorial Guinea(NYT 4/19/06). Saudi Arabia produces approximately 265 billion barrels per year, Iran produces about 96 barrels, and Russia produces roughly 54 barrels a day (Aneki, 4/13/06). Compared to the world top consumers; China consuming 38.95%, United States consuming 19.4%, Asia Consuming 13.8%, Canada consuming 4% and the United Kingdom consumes 3.4%. Our oil world is mostly controlled by a union called OPEC, but not all of the world’s nations are part of this union (Oil Price Increase of 2004 and 2005, 4/13/06).

The Organization of the Petroleum Exporting Countries, or OPEC, was founded in mid September of 1960. They had their first initial conference in Baghdad from September 9th through the 14th. The five primary members were Saudi Arabia, Iran, Kuwait, Iraq and Venezuela. Since then six more nations have joined this elite group; Algeria, Indonesia, Libya, Nigeria, Qatar, and United Arab Emirates (Danielsen pg 4). This group was formed to object pressure from major oil companies and to refrain from lowering the price of oil to the producing countries (OPEC 4/21/06). OPEC collects price data to calculate the average price for oil and use that to control the world’s oil market conditions. They also meet on a regular basis to discuss prices and to set crude oil

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production quotas. For example the estimated the average price for a barrel of oil in 2005 as fifty dollars and seventy-one cents (Country Analysis Briefing, 4/21/06). OPEC has

about two-thirds of the nations oil. That is forty percent of the world’s production of oil. OPEC also exports about half of our nation’s oil. OPEC also helps with the currency discrepancy. The exchange of oil is all done in United States currency, so OPEC makes sure that countries don’t loose money from currency exchange (OPEC April 21, 2006).

Our current price per oil barrel as of April 25, 2006 was seventy dollars and forty-five cents. This is am increase of a dollar and eight cents from earlier in the year. This price is only forty cents from a previous high, set on August 30 by Hurricane Katrina. This chart below shows the increasing price of oil as stated by NYMEX.

(Oil Price Increase of

2004 and 2005, 4/13/06).

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It’s hard to believe but only two years ago the price of one barrel of oil was down around 30 dollars. Back in September 2003 oil was twenty-five dollars a barrel, and by August of 2005 the price had spiked to nearly sixty dollars a barrel. Although with our growing

and changing economies change is bound to happen (Oil Settles Above $70 a Barrel, 4/13/06).

Now that China is becoming more advanced in its technology; for example, the use of automobiles, they are sucking up a huge amount of the world oil supply. Japan use to be the world’s second largest user of petroleum oil, but has now lost that title to China. China uses roughly 6.5 million barrels of oil a day. The world’s leader in the most usage of oil is the United States, which is why China is a bigger threat to our oil supply. Because of our tensions with Iran, OPEC is controlling the amount of oil we receive from Iran. China, however, is in close alliance with Iran and is having no problem picking up our share of the oil. China is also trying to find oil for longer storage term from where ever it can, even places like Sudan and Burma. The risk of taking oil from such unstable countries is huge and the consequences can be threatening. Besides taking oil from poorer countries China is also looking around top find other nations who can pipeline oil to their country (NYT 4/19/06).

On November 2004, China has signed a seventy billion dollar deal with Iran. The Chinese oil giant, Sinopec, made an agreement to develop the Iranian oil field, Yadavaran. This oil field is said to be able to produce roughly 300,000 barrels of oil per day. China’s National Petroleum Corporation has bought out Petrokazakhstan, also. Petrokazakhstan is a Canadian run company based in Kazakhstan. Petrokazakhstan was

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formerly run by Soviet Union and it was their largest independent oil company. This company has built a pipeline to the Chinese border to bring to oil to their country.

Finally, last month Russia stated that in five years they will have two pipelines running to the Chinese border to provide them with