Brent crude oil, already up $1.50 on the
saber-rattling coming from Iran, went up a further $2 when
this Reuters story broke.
OPEC producer Kuwait's oil reserves are only half those officially stated, according to internal Kuwaiti records seen by industry newsletter Petroleum Intelligence Weekly (PIW).
"PIW learns from sources that Kuwait's actual oil reserves, which are officially stated at around 99 billion barrels, or close to 10 percent of the global total, are a good deal lower, according to internal Kuwaiti records," the weekly PIW reported on Friday.
How much lower?
It said that according to data circulated in Kuwait Oil Co (KOC), the upstream arm of state Kuwait Petroleum Corp, Kuwait's remaining proven and non-proven oil reserves are about 48 billion barrels.
Instead of 99 billion barrels, they have 48 billion.
This is not really surprising. When OPEC started basing quotas on a percentage of oil reserves, many OPEC nations suddenly announced big increases in their reserves (which allowed them to sell more oil). While some analysts were skeptical, many accepted the new numbers. It had been customary for the Western companies who first explored the Middle East to understate their discoveries, so it was possible that OPEC countries were merely updating those old, extremely conservative estimates.
It looks like that's not the case, at least for Kuwait. And, in all likelihood, not for the other countries of the Middle East, either.
Though the state of Iraq's oil reserves are still classified, the word going around is that, rather than the 112 billion barrels estimated before the war, they actually have only 46 billion barrels.
And what about the mother of them all, Saudi Arabia? Matthew Simmons has warned for several years now that they don't have as much oil as they claim. In fact, he argues in an article in today's Independent that Saudi Arabia peaked at the end of 2004.
Oil is back up near its record high again, on everything from weather to civil unrest. Of course, that's always been part of the oil industry. But something is different now. Now, the market is getting more and more worried about the future. Prices are hitting record highs as far in the future as 2012.
Now might be a good time to trade in that SUV...