Forecasting OPEC Crude Oil Supply

Abstract

Abstract No one can underestimate the importance of crude oil in the modern world today. It is considered the key foundation of the world's first trillion-dollar industry and the principal item in the balance of payments and exchanges between nations. To truly appreciate the significance of this precious commodity, just imagine the day when all of the world's transportation systems and factories cease to function when the world has consumed its last drop of oil. This brings us to the main and crucial question: How long will oil last? Crude oil is the lifeblood of the 12 member-nations of the Organization of Petroleum Exporting Countries (OPEC), which produces 40% of the world's oil supply and holds three-quarters of the proven reserves. Reaching oil production peak can be alarming to OPEC members, where oil revenue is the main feeding stream of the gross national product (GNP). Many researchers, in the past decades, tried to find an answer to this crucial and critical question. Unfortunately, crude oil supply forecasting is a challenging endeavor. This paper presents our forecast for the OPEC countries supply of crude oil to years beyond 2050. We applied the "multi-cyclic Hubbert" approach that accurately models the oil-production history of OPEC countries, which are virtually most of the world's crude oil supplier. The analysis indicates that the OPEC ultimate oil recovery is about 1.137 trillion barrels. Of this amount, about 0.9117 trillion barrels remain to be produced by the end of 2080, where the peak is expected to be in 2025 at the production rate of 90 million barrels per day. OPEC has 77% of the world's remaining reserves. Furthermore, most OPEC countries will peak between 2020 and 2030, and they will remain the world main supplier of crude oil for the next 200 years.