It was only a matter of time - Bart Anderson of Energy Bulletin even predicted it in the ASPO-USA predictions piece I put together this December! From the Guardian:
The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.
The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels - nearly 40%.
The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand.
However, Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco's 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.
To most of us who have been following the world oil picture closely, this won't be a shock - we've seen increasing evidence of Saudi Arabia's status over the years. It is still tough news for our oil dependent world.
Canada is our major oil supplier, from oil sands. I don't think Saudi Arabia is still in the top five for USA oil consumption.
I don't think Saudi Arabia is still in the top five for USA oil consumption.
Doesn't matter. Oil production is fungible, and if SA can't meet demand the price of Canadian crud will rise too as China sucks up the supply.
Long term, counting on a precarious tyranny to shaft its own people in return for favors from the USA to keep the regime in power just isn't a stable situation.
The question that has to be asked is if the Saudis have been unable to keep their production up (but not openly admitting it), what about everyone else?
It will be interesting how the other oil producing Gulf states react to this cable.
To Jim Thomerson:
In global oil there are only two factors that count: total production globally and total demand globally. Because of global transport the supply evens out across the globe and the demand evens out across the globe.
In any case, anyone who knows anything has realized that we are right now (give or take a decade) at peak supply.
"In any case, anyone who knows anything has realized that we are right now (give or take a decade) at peak supply."
A decade? The most optimistic projections put peak supply in 2015.
It's far more likely we're at the peak right now and going to see the decline in several years.
The pushback on this story has already begun:
Once again, a case of geologists vs. trader/brokers/economists.
@Alex, we have been on undulating plateau since '05. I guess we'll find out soon enough if we're already at the top.
I wonder how this revelation will influence the relationship between the US and Saudi Arabia. The latest news says the Saudi Arabian leaders have warned Obama not to humiliate the Egyptian president so this is a clear indication that they still exercise a lot of influence as far as the mutual relationship is concerned.
Have you read Kurt Cobb's post on this? None of the information leaked is really new.
What makes me more angry is the way America have been making snide comments about their allies. Maybe next we'll think again before joining US imperialist wars.
hahahaha , you missed the big part THE GAS dude saudi arabia oil might run out but THE GAS will take twice long and btw saudi arabia will still have cash coz they are building alot of companies that will keep em average cashed when they are broke in oil and gas.