What If Key Oil Taps Are Turned Off?

Tensions in the Middle East, most topically Iraq and Iran, are traditionally accompanied by speculative panic which drives oil prices up. But that’s hardly new as a general syndrome and previous flashpoints have never before sent the price to the current heights of $70 per barrel. Is there something different, something extra, this time?

Yes, was the answer this month, when Total Kenya did something the oil industry doesn’t usually do: It invited the captains of industry to a briefing and a straight-talking question-and-answer session.

One of Total’s top global strategists, Catherine Roge, explained that the whole shape of oil supply and demand worldwide changed in 2004 when the emergence of China trebled the rate of increase in global crude consumption.

A couple of years along that graph, and the rate at which consumers are buying crude, is in danger of overtaking the rate at which producers and refiners can supply the stuff. That is unprecedented.

Right now, the whole world has proven oil reserves of 1,115 billion barrels of crude (about 65 per cent of those are in the Middle East).

Academically, that’s enough to keep us going for about 40 years at current trended consumption rates.

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