A Note on the Geopolitics of Oil
Saudi Oil Minister BACKGROUND INFORMATION Oil is measured in barrels. A barrel is 42 gallons. Total global daily production is around 96-97 million barrels/day. Saudi Arabia, Russia and the United States all produce around 10 million barrels a day. With their allies, these three countries account for close to 40% of global production. Because of the improved technology of shale oil production, U.S. output has gone up almost 5 million barrels/day since 2008. Currently, total global production is greater than total demand by somewhere between one and three million barrels/day. There are record amounts of oil in storage. A small percentage increase of supply over demand has led to a large decrease in price. In the fall of 2014, a barrel of oil cost about $100/barrel. Last month the price fell to around $30/barrel. Since then, it has rallied to around $40/barrel. THE ECONOMICS AND GEOPOLITICS OF OIL The economies of seven...