The Outlook for the Global Supply of Oil: Running on Faith?
The dramatic reduction in global demand, and the decline in the spot price of crude oil in the second half of last year, may have significant implications for the future supply of oil. Investments in conventional methods of extraction have been constrained, since easily accessible oil reserves are typically concentrated in countries with geopolitical uncertainty and/or state-run oil companies. Moreover, nearly half of all global oil production, and roughly 75 per cent of proven reserves, are accounted for by the Organization of the Petroleum Exporting Countries (OPEC). In this paper, the authors assess the implications of recent developments for the future supply of oil. They find that (i) the OPEC cuts announced in December 2008 could provide important support for prices in the coming year, and (ii) low prices have depressed, and may continue to depress, oil infrastructure investment, and thus could amplify existing supply constraints.
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| Length: | 16 pages |
| Date of creation: | 2009 |
| Date of revision: | |
| Handle: | RePEc:bca:bocadp:09-9 |
| Contact details of provider: | Postal: 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada Phone: 613 782-8845 Fax: 613 782-8874 Web page: http://www.bank-banque-canada.ca/
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Calista Cheung & Sylvie Morin, 2007.
"The Impact of Emerging Asia on Commodity Prices,"
Money Affairs,
Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 181-224, July-Dece.
- Calista Cheung & Sylvie Morin, 2007. "The Impact of Emerging Asia on Commodity Prices," Staff Working Papers 07-55, Bank of Canada.
- Stephen P. A. Brown & Raghav Virmani & Richard Alm, 2008. "Crude awakening: behind the surge in oil prices," Economic Letter, Federal Reserve Bank of Dallas, vol. 3(may).
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