The recent spike in the price of oil has once again drawn our attention to the importance of a ready supply of oil to our modern economy. Concerns have centered on the potential effects of a disruption of the supply of oil coming out of Libya. Most recently, these worries have sent the price of oil over $100 a barrel.

TUTORIAL: Introduction To Fundamental Analysis

Like all markets, in theory, oil prices are driven by a normal supply and demand dynamic. If the supply of oil is disrupted, prices will rise. However, some have commented that current price rise may be an overreaction, since Libya produces only about 2% of the world's oil per day. While that is not an insignificant amount, other large oil producing countries could potentially step up production to fill that supply gap. Here are the top five oil-producing countries from 2010. (The drillers are just one aspect of the oil & gas industry. By knowing some details of their role, you'll be better suited to make investment decisions. Check out Understanding Oil Industry Terminology.)

1. Russia
Russia is the single largest oil producing country in the world, with a production of about 10,124,000 barrels per day, according to statistics compiled by the U.S. Energy Information Administration. This represents just under 12% of the world supply of oil. Russia has about 60 billion barrels of proven oil reserves, or about 5% of the world total oil reserves.

2. Saudi Arabia
Saudi Arabia produces only very slightly less than Russia with approximately 10.121 million barrels per day - 12% of the total world production of oil. Saudi Arabia has the world's largest proven reserves of oil, with approximately 265 billion barrels, or about 20% of the world's proved oil reserves. This allows Saudi Arabia to increase and decrease its level of oil production depending on market conditions. Saudi Arabia was the largest oil producer as recently as 2008.

3. The United States
Many may not realize that the United States is such a large oil producer. The United States produces about 9.6 million barrels per day. This represents 11% of the world oil supply. However, the United States does not have overly large proven oil reserves. Most known reserves are already being tapped for current production needs. The United States only has about 19.1 billion barrels of proven reserves, representing only about 1 to 2% of the world's proven oil reserves. (Before jumping into this hot sector, learn how these companies make their money. See Oil And Gas Industry Primer.)

4. China
China is the world's fourth-largest oil producer, supplying about 4.27 million barrels per day, and about 5% of the world oil supply. Like the United States, China does not have extradordinarily large oil reserves, only about 20.3 billion barrels. Much like the United States, this is a very small fraction of the world's oil reserves - particularly relative to the amount of production.

5. Iran
Iran produces about 4.25 million barrels of oil per day, for about 4.9% of the world oil supply. Iran is regarded as a major player in the world oil market because it has a very large reserve of proven oil. Its proven reserves are approximately 137 billion barrels, or 10% of the world's proven oil reserves.

The Bottom Line
Although oil prices have spiked due to turmoil in the Middle East, many expect that price will gradually return to more normal levels unless protests spill over to disrupt production in larger oil-producing states like Saudi Arabia and Iran. (So you've finally decided to start investing. But what should you put in your portfolio? Find out here. Check out How To Pick A Stock.)

Related Articles
  1. Stock Analysis

    The 5 Best Buy-and-Hold Energy Stocks

    Understand why energy companies' stock are volatile when oil prices are volatile. Learn about the top five energy companies to buy and hold.
  2. Investing

    Have Commodities Bottomed?

    Commodity prices have been heading lower for more than four years, being the worst performing asset class of 2015 with more losses in cyclical commodities.
  3. Investing

    Oil: Why Not to Put Faith in Forecasts

    West Texas Intermediate oil futures have recently made pronounced movements. What do they bode for the world market?
  4. Markets

    How Energy’s Debt Bubble Affects Your Portfolio

    Depressed crude oil prices are here to stay for the foreseeable future. Here's how it will affect an oil industry riddled with unsustainable debt.
  5. Insurance

    The 5 Biggest Russian Insurance Companies

    Discover the five companies that dominate the Russian insurance market, and learn a little more about their business operations and ownership.
  6. Stock Analysis

    Who Are Delta Airlines’ Main Competitors?

    Compare the top competitors of Delta Air Lines, Inc. Take a deeper look into the key drivers of competition in the airline industry.
  7. Investing

    Impact Investing Funds: What are the Risks?

    Impact investing funds can carry risks unique to this asset class, including political risk, currency risk and exit risk.
  8. Investing News

    Wednesday Intel: Jobs, Manufacturing and Oil

    Today's economic data relates to employment levels, industrial production and crude oil.
  9. Entrepreneurship

    Top 3 Most Successful Russian Entrepreneurs

    Discover the history of three of Russia's most successful and well-known entrepreneurs, including their educational backgrounds and entrepreneurial efforts.
  10. Economics

    Benefits of China Changing It's One Child Policy

    China's one-child policy is changing, and investors are looking for ways to cash in. The reform might not have the effects that many anticipate, however.
  1. What kinds of costs are included in Free on Board (FOB) shipping?

    Free on board (FOB) shipping is a trade term published by the International Chamber of Commerce or ICC, that indicates which ... Read Full Answer >>
  2. What are the differences between B-shares and H-shares traded on Chinese stock exchanges?

    Equity listings in China generally fall under three primary categories: A shares, B shares and H shares. B shares represent ... Read Full Answer >>
  3. What are the differences between H-shares and A-shares on Chinese and Hong Kong stock ...

    Publicly trade companies in China generally fall under three share categories: A shares, B shares and H-shares. A-shares ... Read Full Answer >>
  4. Why are financial markets considered to be transparent?

    Financial markets are considered transparent due to the fact it is believed all relevant information is freely available ... Read Full Answer >>
  5. How do the costs of oil sands producers compare to traditional drillers?

    The oil sands of Canada are some of the most expensive crude oil assets in the world to produce. Each asset type, such as ... Read Full Answer >>
  6. Do all oil companies received the quoted price of West Texas Intermediate for their ...

    The quoted, or spot, price of West Texas Intermediate, or WTI, crude oil is just one of several benchmark oil prices. The ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  2. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  3. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  4. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  5. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
  6. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!