What are 'Oil Reserves'

Oil reserves are an estimate of the amount of crude oil located in a particular economic region. Oil reserves must have the potential of being extracted under current technological constraints. For example, oil pools situated in unattainable depths would not be considered part of the nation's reserves. Reserves are calculated based on a proven/probably basis.

BREAKING DOWN 'Oil Reserves'

Saudi Arabia, Kuwait, Iran, Iraq, Venezuela, Russia, Mexico, and Canada have some of the world leading oil reserves. British oil company BP estimates that the world has 1.707 trillion barrels of oil reserves, which would be sufficient to meet 50.6 years of global production at 2016 levels. ENI says the world has 1.66 trillion barrels. Canada has over 150 billion barrels of oil reserves with a significant portion concentrated in the Alberta oil sands. OPEC countries currently hold 71.5% of global proved reserves. If the rate of technological improvement exceeds the rate of extraction, national oil reserves will increase.

Eni Reserve Chart


Measuring Oil Reserves

One of the leading sources of information about global oil reserves is the BP Statistical Review of World Energy. This publication dates back several decades and is considered a high-quality objective and globally consistent source of data on world energy markets. Another source is the World Oil Review supplied by the Italian oil company ENI SpA. Similar to BP's statistical review, ENI's publication provides details about global oil reserves. The U.S. Energy Information Agency is a leading authority for more information about U.S. oil reserves dating back to 1900.

Reserve to Production Ratio

One of the critical ratios analysts use to measure the longevity of reserves is the Reserve-to-Production Ratio (R/P), which is a measure of the number of years a reserve base will last at current annual production rates. Companies operating in the oil industry, as well as oil-producing countries, use this measure. This chart from BP reveals two significant trends in global oil reserves. The first and most obvious is the massive increase in South and Central American oil reserves relative to production since 2006 when Brazil made some significant oil finds in their offshore pre-salt basins. BP currently estimates that the region has enough oil reserves to last for 120 years at current production levels.

The other important data is the persistent downtrend in Middle Eastern oil reserves relative to production. In the 1980s, Middle Eastern countries had R/P ratios similar to what South and Central America enjoy today. Over the last 30 years, this ratio has consistently deteriorated as production rates increase and reserves become harder to find. Reserves to production now stand at about 70 years.

Oil Production History

  1. Estimated Ultimate Recovery - EUR

    Estimated Ultimate Recovery (EUR) is a production term used in ...
  2. Possible Reserves

    Possible reserves are an estimate of the amount of oil or natural ...
  3. Peak Oil

    Peak oil is the point at which global oil production will hit ...
  4. Reserve Ratio

    The reserve ratio is the portion of depositors' balances that ...
  5. Working Reserves

    Working reserves, or excess reserves, are reserves held by banks ...
  6. 3P Oil Reserves

    3P oil reserves are the total amount of reserves that a company ...
Related Articles
  1. Investing

    Do Countries With The Most Oil Reserves Actually Produce The Most Oil?

    Oil, aka Black Gold, is so precious that wars have erupted over it. So why is it that not all oil-rich nations are money-rich nations?
  2. Insights

    Who Wins With Low Energy Prices? 

    Low oil prices are here to stay for some time. Which economies will benefit or lose from the low oil price regime?
  3. Investing

    How OPEC (and Non-OPEC) Production Affects Oil Prices

    Oil production from both OPEC and non-OPEC groups are assumed to affect oil prices. A reality check with historical study of whether and how these groups impact oil prices.
  4. Investing

    Long on Oil? Buy Canadian Dollars

    Discover why investing in the Canadian dollar can give investors exposure to the crude oil market without the risks of futures investing.
  5. Investing

    These 5 Countries Move the Supply of Oil

    Learn which countries are the largest source of change in the global supply of oil. Oil prices crashed in 2014 as supply increased and demand dropped.
  6. Investing

    Why Is China Stockpiling Millions of Barrels of Oil?

    Can China’s recent attempts to build a big oil inventory (at current low oil prices) have a positive impact on its economy? Here’s a closer look.
  7. Investing

    OPEC and Its Limited Control Over Oil Prices

    Popular perception is that OPEC controls oil prices. But input from the futures markets and world events limit its pricing influence.
  8. Investing

    Investing in Oil Stocks vs. Oil Companies: What's the Difference? (USO)

    Learn about the major advantages, disadvantages and risks of investing in oil companies and investing in oil and gas exploration companies.
  9. Investing

    Will Shale Oil Companies Go Bankrupt?

    An overview of shale oil companies and the threats they face in the aftermath of the decline in crude oil prices.
  10. Investing

    U.S. Shale Oil Production: The Rise and Fall

    Low oil prices are taking their toll on U.S. shale oil producers, but their rise over the last decade is evidence of increasing U.S. energy independence.
  1. Why did oil prices drop so much in 2014?

    Learn the roles that decreased global demand, new supply sources in North America, and actions taken by Saudi Arabia played ... Read Answer >>
  2. How do central banks acquire currency reserves and how much are they required to ...

    A currency reserve is a currency that is held in large amounts by governments and other institutions as part of their foreign ... Read Answer >>
  3. What is the difference between proven and probable reserves in the oil and gas sector?

    Learn how those in the oil and gas sector classify oil reserves and the specific differences between proven and probable ... Read Answer >>
  4. How does the price of oil affect Venezuela's economy?

    Learn how the price of oil has a direct relationship with Venezuela's economy. High oil prices result in good times for the ... Read Answer >>
Trading Center