Further Ruminations on Saudi Arabia’s Oil Reserves

From Goehring & Rozencwajg

In an unexpected move, Aramco, the Saudi national oil company, announced the Kingdom had directed it to maintain its “maximum sustainable crude capacity” at 12 m b/d and to abandon its longstanding plan of increasing production to 13 m b/d. The financial press took the announcement to suggest the Kingdom expects oil demand will soon peak. “Saudi Aramco Drops Expansion Plans, Raising Demand Questions” ran a Bloomberg headline, capturing the zeitgeist.

We wonder if perhaps Saudi Arabia canceled their expansion plans because they worry that remaining recoverable reserves are now insufficient to support higher sustained production.