The Production Crunch

Last week’s announcement from Caracas that the operations of Western energy companies including BP, Chevron, Conoco, Exxon, Total and Statoil were being reduced due to continuing nationalization of oil reserves, and that the Chinese state oil giant CNPC would play a much bigger future role in exploration and production, poses a serious threat to the global oil market.

The implications for the world economy are potentially catastrophic. The world is not running out of oil, but it will run out of production capacity if the national companies, the new rule makers in this business, don’t invest.

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