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.

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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.)

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