Sanctions soften, and OPEC collapses.
That’s the notion young Saudi princes are mulling over today. They’ve been a beneficiary of oil sanctions since they were put into place in 1995…
Or have they?
At first glance, less oil flowing out of Iran would allow Saudi Arabia to ramp up production and make up for that loss of supply.
This year, Iranian exports (which account for 80% of the country’s total export earnings and 60% of government revenue) have fallen to roughly 2.7 million barrels per day, leaving nearly one and a half million barrels per day of supply on the table.
How bad is this situation really?
Well, even with sanctions in place, Iran still has half a dozen oil customers — including China, India, and Japan, to name a few. And consider this: Iranian oil buyers will be among the most desperate, oil-hungry nations over the next few decades (click chart to enlarge).
According to the EIA, non-OECD countries’ liquids will account for 60% of liquids consumption growth in 2040.
Let’s call to mind the oil industry’s golden rule: Whoever has the black gold makes the rules.
This has been OPEC’s motto for more than 50 years, and it has served them well thus far.
In the grand scheme of oil reserves, Iran is in a good position. And the Middle Eastern nation is ranked even higher if we remove the heavy oil resources in Venezuela and Canada from the equation…
Then again, we can’t exactly dismiss the great oil heist of the 1980s, when the proven reserves among OPEC members magically doubled.
It’s actually one of the more mysterious charts you’ll find in the oil industry today…
Of course, considering how closely guarded their field data is, these barrels may be nothing more than an illusion to maintain OPEC’s dominance over global oil supply.
North America, on the other hand, isn’t bluffing in this global game of oil poker.
Our Ace in the Hole
There is a fundamental difference in oil supply between North America and the rest of the world — and that is the successful development of North America’s unconventional oil and gas resources.
Personally, I consider it the evolution of the oil industry — and a new stage of the fossil fuels era. The signs are all around us. And nowhere is this more evident than in U.S. tight oil production…
You can see this shift toward unconventional supply even clearer in an IHS and CERA report I showed you a few months ago:
Within the next seven years, we could possibly add another two and a half million barrels per day to U.S. supply.
More importantly, we’re staring in the face of the death of conventional oil production.
Now, keep in mind that this has absolutely nothing to do with running out of oil.
What you can expect is that an entirely new wave of oil production is coming online from even the oldest and most well-known fields in the United States…
For example, even though nearly 30 billion barrels of oil have been pumped from just one Texas hot spot, there’s a good, old-fashioned boom taking place once again, thanks to new technologies cracking the code to massive unconventional oil deposits that were previously unattainable.
As you read this, I’m busy putting the finishing touches on my latest report on this very topic.
The report highlights three sorely undervalued players exploiting these tight oil resources today. You can expect it to hit your inbox soon.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
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