The oil price may be falling and global demand is “remarkably” subdued, according to a report last week from the International Energy Agency. But this has not stopped the former chief executive of BP, Tony Hayward, from issuing an uncomfortable warning.
In an interview with the FT, Mr Hayward, who these days runs an oil company in Iraqi Kurdistan, worries that international sanctions against Russia’s oil sector are storing up trouble for the west. They risk cutting investment and damaging supplies from the world’s third-largest producer. The threat may have been masked by increases in American liquid petroleum production, which has surged above its 1970 zenith. But the US may not go on rising for ever, Mr Hayward notes. And when that happens, where will the world find its next new source of supply?
It is a good question. Producing oil has become harder both for reasons of geology and politics; a crude price stuck around $100 per barrel is evidence enough. It may become harder still. Talk about an “age of abundance” is justified only from a North American perspective. Elsewhere it is a different story: one of decline in fading regions such as the North Sea, and political and security threats in countries from Iraq to Iran and Venezuela. Since 2005, all of the increase in the world’s crude production has come from the US.