I've been weighing the figures discussed here and here on my site, and have come up with at least one slightly more positive interpretation of the Saudi numbers -- not enough to avert the main threat if the 14% drop in global output in the month of December is both real and in any way sustained, but enough to perhaps change the options for at least some nations going forward.
King Abdullah of Saudi Arabia has been quoted as saying, in effect, that he has ordered some new finds kept in the ground for the sake of his nation's children and their future.
While I am not entirely convinced that such a significant Saudi shortfall as 4.9% in one month is simply being "kept in the ground" any more than it was entirely consumed by the Saudi people, the dire global oil situation suggests one strong possibility other than a catastrophic collapse in the nation's production.
First, to be clear, the 14% drop in global oil production in December represented a net drop by producers totaling 90% of world production. The only hopeful news out of that drop is that OPEC only fell 2%, owing to the Saudi reduction in exports, and that the crashing nations, supposedly mostly in Latin America, did not have that far to fall and hence can not reduce net global production much further, no matter how badly their fields may go.
If the Saudis were aware of the international industry's situation (and they very likely were), they might have deliberately and substantially cut back their exports -- "tough love," as it's called in America. In effect, by raising the price of oil now while building reserves in the Kingdom, they can help force a degree of life-saving conservation on the world economy at this point while holding back enough oil to sell later, when the situation becomes really dire.
And matters most likely will become incredibly bad, no matter what. Saudi Arabia has very likely peaked in terms of overall oil production, despite intense efforts within the Kingdom to keep oil flowing. But the Saudis need to feed their people, and major food exporters such as the U.S. are going to need at least some oil. Food for oil looks like a very logical exchange, especially given global food-production issues.
This situation may also explain a number of other national strategies, such as China's decision to keep her rare-earth supplies for internal production. The Chinese may need to trade for both extra food and oil, if only to maintain a safe stockpile, and the U.S. and Saudi Arabia are both apt to be willing to trade in exchange for shiploads of solar cells.
I should add, however, that even if the above possibility proves correct, the conventional food and energy markets are going to be incredibly tough if production continues to collapse. Remember, even if Saudi Arabia might have had a reason to hold back oil and spook the market to a more rational attitude, none of the nations indicated in the JODI data as having their production decimated had any such rationale.
Indeed, many of these countries did not even have data listed for the month of December in the JODI report... just a blank spot for each month.
Which seems almost as ominous as a one-month, 14% crash.
Update: In light of the National Emergency President Obama just declared with regards to Libya, there's a bit more to be said.
First, probably the most responsible thing governments can be doing right now, before all else, is making sure that crops get planted in the Northern Hemisphere before any large agricultural producers can be truly rattled by sharp changes in oil's price or availability. If they are working behind the scenes to do this, well, good for them.
Second, the revolution in Libya is critical because that nation is one area not yet suffering dramatic declines in oil production, and because it produces a great deal of oil that can be processed by refineries in Europe that can not handle heavier, dirtier oils provided by many other sources. Which has no doubt had an effect on the price of oil rising faster than in the U.S. Of course, the fact that the U.S. has fewer people and more oil production than Western Europe, and more waste to cut, has probably also affected those prices.
But overall, that 14% one-month drop bodes ill for us all, even if, hopefully, the nations who lost so much output can not decline much further.