Crude oil may not be close to its all time highs reached in 2008. But it is flirting with the US$ 100 per barrel mark on a regular basis now and this too is no ordinary level. Already, countries like India which is heavily dependent on imports to meet their needs, have started feeling the heat from higher prices. Other oil dependent countries are grappling with the same problem as well. It certainly doesn't help that energy, which along with food form the two most important requirements of a common man, is getting expensive by the day.
Thus, in view of the pain being inflicted, it becomes very important to know whether crude prices will take a breather some time soon or we are in for a period of sustained price rise from here on.
Well, it all depends on how seriously one considers a comment from a former exploration chief of a company that has the largest crude oil reserves in the world.
As per some confidential cables made public by website Wikileaks, the former exploration chief of Saudi Aramco, the Saudi Arabian crude oil reserves may well have been overstated by as much as 300 billion barrels!
The cables further disclose that Saudi Arabia might reach an output of 12 m barrels per day in 10 years but before then, possibly as early as 2012, global oil production would have hit the highest point.
Coming back to reserves, the executive has pointed out that Aramco's reserves are overstated by as much as 300 billion barrels. Thus, once 50% of original proven
reserves is reached, there will be a steady decline in output that no amount of effort will be able to stop.
Coming from an old hand, this comment can certainly not be dismissed outright. It should be noted that Saudi Arabia possesses 20 per cent of the world's proven petroleum reserves and ranks as the largest exporter of petroleum. In view of this, any news of overestimation of crude oil reserves to the tune of 40% is sure to send shockwaves across the globe with respect to expectations of future crude prices.