Global Oil Production Trends
In recent decades, a general trend has been observed where global oil production increases by about one million barrels per day annually. In 1983, production was at 56.6 million barrels per day, which increased to 96.3 million barrels per day by 2023, marking a 40 million barrel increase over 40 years.
Crude Oil Production
- Much of what is counted as oil production includes gases like ethane, propane, and butane, alongside biofuels.
- Crude oil, crucial for OPEC's production quotas and price determinations, has seen little growth. In 2023, global crude output increased by just 360,000 barrels per day since 2015.
- Projections into 2026 suggest that crude output will not surpass the 2018 peak, marking a potential lost decade akin to the 1980s post-oil crises period.
Investment Shifts
- Investment in upstream oilfield activities is declining, with spending expected to fall by 6% to $420 billion, compared to $450 billion in solar energy investments.
- Fossil fuels will receive $1.1 trillion in investments, only half of the $2.2 trillion allocated for clean energy, contradicting the notion of the demise of Environmental, Social, and Governance (ESG) considerations.
Impact of Inflation and Policy
- Clean technologies are becoming cheaper, exemplified by a 20% drop in solar module prices over the past year.
- Conversely, US oil sector costs are rising due to tariffs, reducing activity in the upstream segment by an anticipated 8% in 2023.
Challenges for US Shale Producers
- US shale producers face high costs and sensitivity to price shifts, leading to a 5.6% reduction in active drilling rigs since March 2023.
- The backlog of drilled but uncompleted wells has decreased significantly, indicating reduced exploratory efforts.
Global Demand Dynamics
- Saudi Arabian investment priorities have shifted towards gas, with the Jafurah gas field development signaling a potential decline in crude demand.
- China’s oil consumption has been declining since September 2023, with demand expected to peak sooner than anticipated.
- In India, the situation could be more severe, due to increased reliance on electric vehicles and public transport.
The oil industry appears to have surpassed its peak, with future decades likely to see decreased growth and demand.