The oil industry has a history spanning over 5,000 years. Major events include the first structured oil well being built in the Gulf of Mexico and oil crises in the 1970s causing price fluctuations. Currently, world oil consumption is around 85 million barrels per day with the top producers being Middle Eastern countries. Factors like OPEC decisions, geopolitical conflicts, and economic conditions influence global oil prices. While oil remains crucial as a non-renewable resource, peak oil production may be reached by 2030, highlighting the need for alternatives.

1. OIL: HISTORY AND OUTLOOK

2. Oil Industry History is more than five thousand years old

3. First structured oil well was built in the Gulf of Mexico

4. Imbalance in Demand and Supplycreated scope for private players to come inAfter the North Sea disaster in UK in 1988 there was a change in the safety policy of the oil industryWORLD OIL INDUSTRYEconomies of all countries are hugely dependent on oil for growth, development and daily functioning

5. Major crude oil producing countries include Saudi- Arab, Venezuela, Iran, Iraq, Russia, etc

6. World Faced Its First Oil Crisis 1970 and 1980 The world Faced Its First Oil Crisis. Prices rose from Us $ 4 – US $ 40 in 1980’s

7. During the world war I between 1914-1918 demand for oil increased tremendously for functioning of tank, ships and planes

8. Post world war II countries of the middle east took a lead in oil production from the United States.YEARLY TRADING1973: First oil crisisOAPEC proclaimed oil embargo in response to the US decision to resupply the Israeli military during the Yom Kippur war. Price less than $101979: Second oil crisisOccurred in the wake of the Iranian revolution. Price $151980: Oil glutSurplus of crude oil caused by falling demand due to the 1970’s energy crises. Price fell from $35 to $10 due to slow economic activity1990: Oil price shockOccurred due to the Iraqi invasion of Kuwait. Price rose from $21 to $46

9. RESERVES-TO-PRODUCTION RATIO(RPR \ R/P)Reserves-to-production ratio (RPR or R/P) is the remaining amount of a non-renewable resource, expressed in yearsRPR = (amount of known resource) / (amount used per year)Unit : Trillions Of Barrels Annual Usage (2005) : 1.2-2 RPR (years) : 0.03 (40-80)

10. OIL SUPPLY/PRODUCTION

12. OIL PRODUCTION WORLD SUMMARYWorld consumption around 85 million barrels per day

13. Middle east 5- Iran, Iraq, Kuwait, UAE and Saudi Arabia produce 20 million barrels per day80 % world production comes from fields discovered prior to 1973

14. Major oil producers characterized by corruption, crime, political turmoil or arebeyond their peak

15. US- 208,000,000 (barrels/day)OIL DEMAND/CONSUMPTIONJapan- 5,353,000 (barrels/day)China- 6,930,000 (barrels/day)Russia- 2,916,000 (barrels/day)Germany- 2,618,000 (barrels/day)India- 2,438,000 (barrels/day)Canada- 2,290,000 (barrels/day)South Korea- 2,130,000 (barrels/day)Brazil- 2,100,000 (barrels/day)Mexico- 2,078,000 (barrels/day)

16. Demand of oil 86.8 million barrels per day and is expected to grow at 1.2 %

17. Growing oil demand in developing economies owing to the rise in industries

18. In India favorable demographics will lead to penetration of automobile industry and hence increase demand Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental OrganizationCreated at the Baghdad Conference on September 10–14, 1960Founder Members- Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia and VenezuelaWorks as a cartel and aims to stabilize prices for crude oil Later joined by- Qatar (1961), Indonesia (1962), Socialist People’s Libyan Arab Jamahiriya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975) and Angola (2007)OPEC

19. OIL PRICECrude oil prices behave much as any other commodity with wide price swings in times of shortage or oversupplyEnergy Information Administration (EIA): crude oil prices began surging since January 2008 and reached a record high (US$145 per barrel in July) The deepening of the financial crisis led to a steady decline in the price of crude oil (US$30-US$40)Prices started recovering in February 2009 OPEC’s decisions also has a significant impact on oil pricesLess production of oil also made an increase in oil prices

20. FACTORS AFFECTING OIL PRICES Inelastic Demand and Supply of oil

21. The value of the US Dollar

22. OPEC

23. Effect of war, natural disaster and recessionRECENT TRADING

24. Oil prices and the expectations* IN USD ($)* IN USD ($)

25. MARGINAL COST OF OIL PRODUCTIONMarginal Cost Of Oil Production is the point below which it becomes uneconomic to bring new oil projects to marketGoldman Sachs (September 2008): Pegs the marginal cost of production for the oil industry at US$80-85 per barrel (/bbl)Also pointed out, forecasting, the number is likely to be $85-90 per barrel (/bbl)

26. “Good oil demand, reliable supply, beautiful prices, we are very happy,” Saudi Arabian Oil Minister Ali al-Niami“WHAT IF??” OIL PRICES RISE???“ What if ??” oil prices rise ????Click to view Video

27. EFFECTNEGATIVE IMPACTPOSITIVE IMPACT

28. WHY THEY WILL RISE ??The weakness in the USD is likely to keep Oil prices firm over the next 12 months, despite weakening of Key economiesConfidence of the businesses all over the world (Industrial Consumption)Presence of a cartel – OPECThe shift in the strategy of inventory managementEmergence and Growing Importance of futures market in setting oil prices (Speculation)Growth in Consumer ConsumptionHigh RP Ratio (approx. 41 years)

29. FUTURE OF OIL

30. PEAK OILA Reminder that oil is a NON RENWABLE ResourcePEAK OIL: Maximum level of Oil productionthat can be achieved globally, after which oilproduction will begin its gradual decline.Finite Quantity of Accessible Oil

31. As no fall in demand- Major Crisis to witness.

32. Will be achieved by 2030.OIL SUBSTITUTEA big pool,………………..But we can conclude, “A BIG NO POSSIBLE SOLLUTION AS EFFICIENT AS OIL”

33. THANK YOU…BY: ANKITA DEWANKARAN MEHTAMAHIMA SONIPURBSHA SHARMARISHABH KHANNASAHIL TREHAN