According to Bloomberg:

Oct. 29 (Bloomberg) — Global crude-oil output is falling faster than expected, leaving producers struggling to meet demand without extra investment, the Financial Times said, citing a draft of an International Energy Agency report.

Annual production is set to drop by 9.1 percent in the absence of additional investment, according to the draft of the agency’s World Energy Outlook obtained by the newspaper, the FT reported. Even with investment, output will slide by 6.4 percent a year, it said.

Read the full article at Bloomberg

- This article is screaming at my face the confirmation of the PEAK OIL theory….do I need to say more?

The weird thing is the economy seems to be the one that is sinking the oil prices and currently the oil prices goes back down to $64 per barrel range and this may unfortunately force OPEC and Non-Opec oil producing countries to do drastic “actions” to curb the falling oil prices and investments.

This means much less oil next year…are you ready for the crunch?

Now, geological reasons behind the decline of matured old oil fields is seriously a very dangerous problem …the alternative new oil fields must be open faster to replace the declined amount and just to maintain the current output of crude oil supply to the world.

The problem now is NET OIL, extractions non-conventional costly oil from deep sea, tar sands and research on more efficient extraction methods will be put on indefinite HALT until the oil prices goes back to profitable region and the flow of “investments” goes back into oil.

This may be harder…then it looks.

Soon there will be countries that cannot survive the shortages….will find their own supermarket empty and people very angry.

According to Financial Times FT.com:

Robert Dudley, the outgoing chief executive of TNK-BP, said that Russia’s oil production looked set for a protracted decline, in part due to lack of investment.

In only his second public appearance since he was forced to leave Russia in July amid a bitter struggle for control of TNK-BP between BP and its Russian billionaire partners, Mr Dudley said Russian oil production looked to have reached its peak in August.

“There isn’t going to be a precipitous decline. It’s very mature oil fields and there will probably be a gentle decline as we move on,” Mr Dudley said on the sidelines of the Oil and Money conference in London.

“But I believe we are . . . at the top of a broad curve or cycle right now until other things happen.”

Read the full article at Financial Times FT.com

- So, confirmation from Chief Executive of TNK-BP that the oil in Russia had peaked in production until “other things happen” which may means other “newly discovered” oil fields to start extraction?

This confirms one of THE PEAK OIL Theory that major oil fields in the world is about to peak in production or currently PEAKED and set to decline either gently or very steeply.

Looking at the current economic crisis, the excuse for OPEC and Russia will be lacking of investments or probably the price of oil had fallen below the profit margin instead.

However, in the peak oil theory….there are no major oil fields found in the last 40 years that is about the same size of Saudi Arabia of the mysterious oil reserve figure (260 billion barrels) that remain unchanged for years.

If you search all the websites on which oil field had peaked in extraction and in decline…you will be shocked as well how many is officially peaked.

We might be looking a global oil shortage due to the financial crisis right now which I think represent “Net Oil” theory which means the oil may remain in the ground even at higher demand because the cost of extractions had gone below the crude oil price tag making it not profitable to even extract it at all.

The problem now is what happens if the oil price spike up again…I guess you know the answer.

See Also

1. OIL INDUSTRY REACHING PEAK PRODUCTION RATE, WARNS EXPERT
2. Will Protest Bring Down Cost Of Oil??
3. Forum sees oil peak as world crisis
4. Has Russia oil output peaked?
5. Russian Declining Oil Production = Peak Oil Russia?
6. Key oil exporters can turn into importers in 10 years: report

According to RIA:

MOSCOW, October 29 (RIA Novosti) – Russia will decrease its oil production by 1-1.5% next year, the vice president of LUKoil, Russia’s independent oil producer, said Wednesday.

“Next year knowing in view of companies’ plans, production will decline 1-1.5%,” Leonid Fedun told a UBS conference in Moscow.

Fedun also said Russia could join the Organization of the Petroleum Exporting Countries.

“Cooperation has started between Russia and OPEC. Maybe we are even talking about Russia joining OPEC. LUKoil and Rosneft heads are due to take part in the next OPEC session in December,” he said.

Fedun said LUKoil believes capital investment by Russian companies needs to reach $100 billion annually for Russia to maintain its current levels of oil production.

The Russian Energy Ministry forecasts in 2008 oil production in Russia will drop 1 million tons, or 0.3-0.4% to 490 million tons against last year.

- So, Russia as Non-OPEC oil producing countries is cutting oil supply as well!!? Let’s the fun begin as they are officially blaming on the economic crisis for lowering the investment needed to maintain oil production.

This coincides with the cost of production theory which cuts directly into the profit margin when the price goes below cost…the production will be reduced or cease operation totally…which is global oil supply disruption.

OPEC had previously declared to cut 1.5 million barrels per day of oil supply for November 2008 and may cut more if the oil prices remains low.

Now, the news out now is the oil prices is going up again…since yesterday price of U.S. $63 to current oil prices of $68 is a small $5 spike within a day which is the kind of volatility expected by me.

The Tsunami effect previously mentioned by me in the previous post might just materialize in from now November or to the day before U.S. Presidential election day…and the direction may go ANY DIRECTION in rapid movements.

According to Rigzone:

Oil-Price Rebound Could Be Severe

The slump in oil prices has spread relief among consumers and fuel-reliant industries, but also is squeezing the companies who could invest in new sources of oil — spurring concerns that prices will prompt them to shelve investments. Industry executives warn that could mean the world will face a dramatic ramping up of prices as soon as the global economy, and demand, begins to rebound. “Low oil prices are very dangerous for the world economy,” said Mohamed Bin Dhaen Al Hamli, the United Arab Emirates’ energy minister, speaking Tuesday at an oil-industry conference in London.

“We need an adequate and reasonable oil price that will continue to stimulate investment.” With prices now languishing, he said, “a lot of projects that are in the pipeline are going to be reassessed.” The global economic slowdown has driven down demand for oil, pushing crude prices to levels not seen since the spring of 2007. In an attempt to stem the decline, the Organization of Petroleum Exporting Countries agreed last week to slash output by 1.5 million barrels a day — its biggest single reduction in almost eight years.

- OPEC together with Russia (One of the largest oil producer) to slash oil production within months apart may means the world oil supply may suddenly go BELOW the world oil demand and cause acute shortages.

This means sharp spike in oil prices and SUPER HYPERINFLATION!! Welcome to my world.

There had been some speculation that someone from the oil industry leaked out their intention to bankrupt the middle east by declaring new oil discovery in primary 2 locations namely Russia and Indonesia that reportedly much larger then the whole of middle-east output.

This however is the wild card as we may have a couple of conspiracy folks like Alex Jones declaring there are no energy crisis in the future due to the “leaked” information on the undeclared “oil discoveries” that supposedly would and may had already caused the oil price to collapsed to $50 per barrel.

However, knowing realistically that the cost of extraction non-conventional oil such as tar sands from Canada and many super deep sea oil rigs ARE EXTREMELY COSTLY hence if the oil prices drops below the cost of extractions may means immediate supply cut or ceasing operation of oil extractions until further notice.

The deep withdrawal of oil prices is to me the most feared “Tsunami syndrome” when the general direction of waves withdrawn back into the sea in such a speed that can be categorized as highly unusual may represent that the Tsunami is approaching and about to engulf the whole world in one big wave.

Now the oil prices is …….that Tsunami hence I implore you to buckle your seat belt and ride this wave to above $!50 per barrel within 2-3 months time.

But I could be wrong……if the Alex Jones is right then probably the oil will goes below current prices…and we can see deflation of world economy for some time.

It’s time to gamble…but either way it’s pretty bad hence we need to just enjoy while we can but don’t get into debt.

According to my Free Live Nymex Crude Oil Price Chart:

The price of nymex crude oil had collapsed below U.S. $63 per barrel creating shock waves across the oil producing countries and probably OPEC officials right about now.

My personal guesstimate will be imagining those key officials in OPEC waking up in disbelieve reading the latest price tag of their “precious” commodity that supposedly gave “life” to the world’s economy and the very survival supposedly hangs in the balance for the availability of this very fossil fuel called oil.

So it seems to me the world had either found a way to power the world without oil or simply there is a very serious hidden agenda hide behind the recent fall in the oil prices traded by millions of traders controlled by banks and financial institution.

Why would the world continue to buy less oil even after OPEC October 24, 2008 announcement of cutting oil supply by 1.5 million barrels per day at November and 2nd announcement threatening to cut further supply if the prices continue to fall?

Why does President Bush goes to Saudi to ask for more oil previously when the oil prices is $125? Now the OPEC (includes Saudi) are cutting oil supply…why?

My conspiracy theory are the following:

1. probably the world wants the world oil supply to be cut by OPEC and create a bonus when the panic buying starts.

2. There is a free energy device found somewhere in the world free of charge?
3. OPEC is the one buying back their own oil (in paper) previously to create panic buying and now purposely sell back into the market to spark panic selling to create false mirage of over supply and legitimately cut actual oil supply that they no longer able to produce (extract) from the ground due to old declining oil fields.

   This actually supported the peak oil theory that the oil supply eventually will decline regardless of higher demand. They breaks the economy to create demand destruction and finally cut oil supply because of the collapse in oil prices.

My theory on how the 1.5 million barrels per day cut from OPEC quota could very well be the total amount of oil that OPEC members no longer can supply due to declining oil fields and the amount may be increasing.

Expect less oil supply in the future.