Demand for Oil (Edexcel GCSE Geography: B (1GB0))

• Although every country in the world uses oil, the reserves of oil are unevenly distributed around the world
• The figures for oil reserves are estimates as exactly how much oil is located underground is unknown
  • The amount of oil is finite - at some point it will run out
  • The estimates of oil reserves change as the technology to find and access oil improves
  • In 2016 the U.S. Geological Survey (USGS) estimated 20 billion barrels of accessible oil was in the Wolfcamp Basin, Texas. In 2018 this estimate was changed to 46.3 billion barrels
• Oil production is also unevenly distributed 

Global distribution of proven oil reserves

Global oil production 2021

• Oil consumption is increasing around the world 
  • China and other emerging countries are experiencing the largest increase in consumption
• The increase in consumption is due to:
  • Increasing world population increases energy demands
  • As countries become wealthier the demand for products increases and people have more things which use energy
  • Increasing amounts of technology which use energy 

Oil consumption by world region

The world oil price fluctuates and is dependent on a range of factors including:

• Conflicts
  • The invasion of Ukraine by Russia led to oil prices soaring due to concerns about global supply
• Diplomatic relations
  • In 2010 Venezuelan President Chavez threatened to stop oil sales to the USA
• Recession/boom
  • In 2008 the financial crisis and recession led oil prices to fall steeply
  • Before 2008 economic growth led to a steep rise in oil prices
• Over/under supply
  • In 2013-14 a rivalry between Saudi Arabia and Iran led Saudi Arabia to increase the supply of oil which caused the price to fall
  • A decrease in supply leads to an increase in price such as in the period following the Iranian Revolution in 1979
• Customer preferences
  • Customers may prefer alternative/renewable energy sources and this can cause a fall in demand which then leads to a fall in oil prices 

Factors affecting global oil prices