US is the Global Leader in Oil Reserves, But the Saudis Remain the True Market Kings: Analysts

Rystad Energy says the U.S. is the global leader in oil reserves, but Andy Critchlow says Saudi has all the influence over prices.

Rystad Energy has determined that with 264 billion barrels, the U.S. is the global leader in oil reserves, surpassing those of Saudi Arabia and Russia – and that many countries, especially those under the Organization of Petroleum Exporting Countries, have exaggerated the size of their reserves in self-reported surveys.

These disclosures accompany a report from Reuters that questions the Saudis' stated proven reserves of 266 billion barrels, noting that this number was abruptly inflated without explanation from 170 billion barrels in 1989, and that most of the country's giant and super-giant oil fields were discovered between 1936 and 1970, with no comparable discoveries being made since then.

Rystad pegs Saudi reserves at 212 billion barrels and Russia's at 256 billion barrels, and states that the exaggerated numbers published by oil producing countries was revealed by determining each country's economically viable reserves.

As for the U.S., Per Magnus Nysveen, head of analysis at Rystad, attributes its volume to a sharp increase in discoveries in Texas's Permian basin over the past two years.

The report calculates total global oil reserves at just over 2 trillion barrels and warns that if the current rate of global production is maintained, oil supplies will last only 70 more years: "With the global car-park possibly doubling from 1 billion to 2 billion cars over the next 30 years, it becomes very clear that oil alone cannot satisfy the growing need for individual transport."

But analysts point out that for the foreseeable future at least, reserves are only significant if they can be produced economically over time, and in a Reuters blog post Andy Critchlow writes that "one day, if wells start to run dry and other energy sources haven't taken crude oil's place, who has how much of what will matter deeply.

"But until then, supremacy in oil reserves is less important than influence over prices. In this regard, Saudi is still unchallenged."

That may be, but Saudi supremacy at a time of low prices is taking a massive toll on the kingdom's economy, as recently noted by Leonid Bershidsky, a columnist for Bloomberg View, who added that the low prices generally benefited the U.S. economy.