Which countries have the largest oil reserves and why does it matter?

According to the BP Statistical Review of World Energy 2020, 14 countries hold in excess of 90% of the world’s oil reserves across the world.

As a byproduct of this ownership, these countries are able to obtain significant amount of economic power and influence.

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Despite its crippling levels of poverty, Venezuela is the leading nation on earth when it comes to oil. The South American country has in excess of 300 billion barrels, over a 17% share of global reserves.

Saudi Arabia is a close second with just under 300 billion barrels, while Canada, with 170 billion barrels, is in third place.

Oil can only be extracted from existing reserves as it is a naturally forming resource which develops over millions of years. This gives those countries an additional advantage.

However, oil reserve levels do not neccessarily correlate to oil production levels. For example, the US and Russia are among the highest producers of oil despite not holding the most reserves within their borders.

It is a critical period for the commodity now as the future influence of oil as a driver of economic growth is set to diminish. Having said that, it remains vital – and profitable – in getting the world economy up and running again in the aftermath of the coronavirus pandemic.

Policies aimed at dramatically reducing carbon emissions will have a massive impact on the industry.

“According to the International Energy Agency, countries that pledged to achieve net-zero emissions cover around 70% of global emissions of CO2. It is likely that policies and measures in this respect will have a profound impact on the oil and gas industry, both in relation to its operations as well as in demand for its products,” said a report by the World Economic Forum.

“The trend to decarbonise the global economy is likely to accelerate peak demand for oil and possibly natural gas as well. Some analysts believe that peak oil will happen in the next few years, others that it has already happened, while some would argue that demand will continue growing for some time yet. Nevertheless, peak demand is on the way.”

Oil producing countries often come together to control supply levels in order to keep prices in a healthy position. As the policy environment across the world changes, in addition to consumer demand for a range of products, this may become more difficult to do.

Oil has many uses beyond energy, including plastics, chemicals and fertilisers, and therefore its demand will not disappear entirely. However, being a top holder of oil reserves may soon not give the same level of economic opportunity as it once did.

OPEC+ representatives will seek to resume talks this week after disagreements within the ranks over proposed extensions to oil curbs.

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