Has Global Oil Production Already Peaked?

The news agency Reuters has seen something the rest of us haven't: Internal Mexican government estimates of that country's future oil production which paint a gloomy picture of rapid decline after 2030. Is this admission just the tip of the iceberg?

For many years those of us suggesting that a peak in worldwide oil production was in the offing kept pointing to several pieces of intelligence including the following:

1. Leaks of information about lower-than-publicly-stated oil reserves among major oil producers. In 2005, leaked internal government documents put Kuwait's oil reserves at 48 billion barrels, just half of the 99 billion publicly claimed at the time.
2. Unexplained massive one-year jumps in oil reserves of major OPEC producers in the 1980s. This was probably tied to OPEC production quotas that were, in part, based on stated reserves. In 2007 the former executive vice president for exploration and production at Saudi Aramco told an audience that as a result of these unwarranted jumps in reported oil reserves, world reserves had been overestimated by 300 billion barrels.
3. Strangely unchanging publicly reported reserve numbers. For example, from 1997 through 2021, publicly reported oil reserves for the United Arab Emirates were 97.8 billion barrels each year. Kuwait's reserves from 2005 to 2021 have been reported as 101.5 billion barrels each year. Of course, for this entire period both countries have been producing large amounts of oil. They may have been finding more oil, but it is hard to believe that the amount they found equaled exactly what they produced year after year. (For the latest reserve data by country, visit this page on the U.S. Energy Information Administration (EIA) website.)
4. The competitive raising of stated reserves by OPEC members Iraq and Iran in October 2010 just a week apart. Neither upward revision was commensurate with any tangible activity in their respective oil fields. Iraq increased its stated reserves from 115 billion barrels to 143.1 billion barrels. Iran followed by raising its stated reserves from 136.6 billion barrels to 150.3 billion barrels.

Later, the "shale miracle" that is supposed to allow U.S. oil production to lead world production to continued growth hit a significant bump when California shale oil reserve estimates were downgraded by 96 percent overnight and total U.S. shale oil reserves dropped by one half. Then came a series of independent reports based on actual well data histories by earth scientist David Hughes that suggested future production estimates by industry and government regarding U.S. shale deposits were likely wildly overoptimistic.

It is not inconsequential if Mexico's oil production drops precipitously from 2030 onward. According to the Statistical Review of World Energy (formerly produced by BP), Mexico is the world's 12th largest producer of oil. But it is the likelihood that Mexico will be joined in the same time frame by many other large producers that should be troubling. The United States (currently number one) and some of OPEC's members who exaggerated their reserves seem likely candidates.

Here is another troubling and inconvenient fact: World oil production-using the proper definition which the EIA follows of crude oil including lease condensate-peaked in November 2018 at 84.59 million barrels per day (mbpd), meaning it has not reached that level since. The most recent production number available, March 2024, shows world production at 82.59 mbpd.

(Those who are longtime readers already know that the peaking of world oil production does NOT mean that we are running out of oil. It means that the RATE of production is declining. And, since our economy depends on an ever increasing RATE of energy production to underpin its growth, this decline since 2018 is already affecting worldwide economic vitality in the form of high oil prices. Oil continues to be the largest source of world energy-almost 30 percent-and it is critical for transportation where it supplies more than 90 percent of total transportation fuels.)

If we are, in fact, past the all-time peak of world oil production, expect more revelations in the next few years like the one coming out of Mexico last week.

By Kurt Cobb via Resource Insights

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