What Are Oil Reserves?

What Are Oil Reserves?

Let me explain what oil reserves really mean. They're essentially an estimate of the crude oil in a specific economic region that we can potentially extract. These estimates come from proven reserves, analyzed through available data. We calculate them on a proven and probable basis, and we don't include oil pools that are too deep or unattainable in a nation's reserves.

Key Takeaways on Oil Reserves

You should know that oil reserves are estimates of crude oil amounts in economic regions extractable with today's technology. The biggest reserves are in Venezuela, Saudi Arabia, and Canada, based on BP's 2020 data. OPEC holds around 80% of the world's reserves, with global estimates at 1.56 trillion barrels as of 2022. In the U.S., the Strategic Petroleum Reserve is our emergency stash to handle major oil supply issues. Also, reserve-to-production ratios tell us how long these reserves might last at current production levels.

Overview of Oil Reserves

As I mentioned, oil reserves are those estimated amounts we've discovered and know exist in areas with crude oil. You can access and recover them through extraction. We make these estimates with high certainty using current tech and geological data analysis.

In BP Plc's 2021 report, they pegged global oil reserves at 1.73 trillion barrels for 2020, using data up to 2024. From their Statistical Review of World Energy, Venezuela tops the list with 303.8 billion barrels, Saudi Arabia follows at 297.5 billion, and Canada is third with 168.1 billion. The U.S. ranks ninth with 68.8 billion barrels.

OPEC's Role in Global Reserves

OPEC estimates 1.56 trillion barrels globally as of 2022, and they say 79.5% of those are held by their members, like Venezuela, Saudi Arabia, Iran, Iraq, Kuwait, UAE, Libya, and others.

How Are Oil Reserves Calculated?

BP’s Statistical Review of World Energy is a top source for this data, going back to 1952 and now handled by The Energy Institute since 2023. Another one is Eni SpA's World Oil Review, which gives similar global details. For the U.S., the Energy Information Administration (EIA) calculates reserves with data from 1900 onward.

A key metric here is the reserve-to-production ratio (R/P), which estimates how many years reserves will last at current production rates. Companies and oil-producing countries use this a lot. As of 2024, global oil reserves are projected to last about 47 years at current consumption.

Current Trends in Oil Reserves

Looking at BP's charts, you see two big trends. There's a huge jump in South and Central American reserves relative to production since 2006, thanks to Brazil's offshore finds. BP says that region has enough for over 150 years at 2020 rates.

But reserve volume doesn't always mean high production. Take Venezuela: despite the largest reserves, its production share dropped to just 0.6% in 2021 due to internal issues starting in 2014.

In the Middle East, R/P ratios have trended down from 100 years in the 1990s to about 80 years in 2020, as production fluctuated and new reserves got harder to find. North America shows a similar drop, with aggressive production increases since 2016 leading to a 30-year estimate in 2020.

What Are the Components of an Oil Reserve?

Petroleum reserves are hydrocarbon deposits in subsurface geologic formations. You can report them for a reservoir, field, basin, or whole country.

Why Are Oil Reserves Important to the United States?

The Strategic Petroleum Reserve is our emergency crude oil supply to counter severe shortages. It was created for disruptions in supply or economy, and only the President can authorize its use. It's a key national security tool, like insurance against oil crises.

What Was the 1973 Oil Embargo?

In October 1973, OPEC, led by Saudi Arabia, imposed an oil embargo on countries supporting Israel in the Yom Kippur War, including the U.S., Canada, Japan, Netherlands, and UK. By March 1974, oil prices had surged over 300%, causing a global crisis with lasting effects on politics and economy.

The Bottom Line

Global oil reserves are estimated at 1.73 trillion barrels, representing extractable crude in various regions using current tech. Top holders are Venezuela, Saudi Arabia, and Canada, with OPEC owning about 80%. For the U.S., the Strategic Petroleum Reserve is vital for security against supply disruptions.