Has global oil production peaked?

• Mexican government estimates point to a sharp decline in oil production after 2030, raising concerns about global energy security.
• Previous questionable practices by oil producers, such as reserve manipulation and overstatement, cast doubt on the accuracy of reported oil reserves.
• The peak in global oil production in 2018 and the decline since then underscore the need to transition to sustainable energy sources.

News agency Reuters noticed something that none of us noticed:The Mexican government’s internal estimates of the country’s future oil production paint a grim picture of a precipitous decline after 2030. Is this admission just the tip of the iceberg?

For many years, those of us who suggested that peak global oil production was near were pointing to several pieces of intelligence, including the following:

1. Leaks of information about lower than publicly reported oil reserves among major oil producers. In 2005, leaked internal government documents put Kuwait’s oil reserves at 48 billion barrels, just half the 99 billion publicly declared at the time.
2. Unexplained, huge annual increases in the oil reserves of the major OPEC producers during the 1980s This was likely due to OPEC production quotas, which were partly based on declared reserves. In 2007, a former executive vice president of exploration and production at Saudi Aramco told an audience that as a result of these unjustified jumps in reported oil reserves, global reserves were overestimated by 300 billion barrels.
3. It is strange that the publicly reported reserve numbers do not change. For example, from 1997 to 2021, the United Arab Emirates’ publicly reported oil reserves were 97.8 billion barrels per year. Kuwait’s reserves from 2005 to 2021 were reported as 101.5 billion barrels per year. Of course, both countries were producing large amounts of oil throughout that period. They may have found more oil, but it’s hard to believe that the amount they found was exactly what they were producing year after year. (For the latest reserves data by country, visit this page (on the U.S. Energy Information Administration (EIA) website).
4. Competitive increases in declared reserves by OPEC members Iraq and Iran in October 2010, just one week apart. None of the upward revisions were commensurate with any tangible activity in their oil fields. Iraq increased its declared reserves from 115 billion barrels to 143.1 billion barrels. Iran moved in the same direction, increasing its declared reserves from 136.6 billion barrels to 150.3 billion barrels.

Later, the “shale miracle” that was supposed to enable American oil production to lead world production to further growth experienced a significant increase when estimates of California’s shale oil reserves were cut by 96 percent overnight and total US shale oil reserves fell by half. Then came a series of independent reports based on actual historical drilling data compiled by geologist David Hughes, which suggested that future industry and government production estimates for U.S. shale plays were likely overly optimistic.

It is not insignificant if Mexico’s oil production falls sharply from 2030. According to World Energy Statistical Review (formerly produced by BP), Mexico is the world’s 12th largest oil producer. However, the likelihood that Mexico will be joined by many other large producers at the same time should be a cause for concern. The United States (currently number one) and some OPEC members who have overstated their reserves seem likely candidates.

Here’s another disturbing and inconvenient fact: World oil production—using the proper definition of crude oil that the EIA uses for lease condensate—peaked in November 2018 at 84.59 million barrels per day (mbpd), a level it has not reached since. The latest available production data, March 2024, puts global production at 82.59 mbpd.

(Those who have been reading us for a long time know that peak global oil production does NOT mean we are running out of oil. It means that the RATE of production is declining. And because our economy is dependent on an ever-increasing RATE of energy production to support its growth, this decline since 2018 is already affecting global economic vitality in the form of high oil prices. Oil is still the world’s largest source of energy —almost 30 percent—and this is extremely important for transport because it provides more than 90 percent of total fuel consumption in transport.)

If we have indeed passed peak global oil production, we can expect more revelations like those revealed by Mexico last week in the next few years.

By Kurt Cobb By Resource Insights

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