Stuart for President!

Back dated oil futures, whether on Iran news, Stuarts interview, or a lack of recent abiotic finds, are making all time highs today (2007 dec futures up $1.20 to $67.30 (hurrican peak was $66.1 last august for this contract)

Good piece, Stuart.  Thanks for doing this.

Good Stuff. When are you going to be on Letterman?

No, but seriously, I'm working on a complete, up-to-date table of total world oil production. The only significant problem I have is Kazakhstan. The EIA doesn't seem to cover it in their t11 series tables, and BP's info is for 2004.

Does anybody have any links to articles or data on recent and near-future Kazakhstan production?

This is a good report but I think there were a couple of errors. It counted Iran's whole production level as lost, when in fact Iran would undoubtedly continue to produce for domestic production, as "plasticgolem" and others noted in the comments. According to the comments, Iran exports 2.55 mbd, so this is the amount that would be lost, rather than the 4 mbd that Stuart assumed.

The calculation of the net impact was rather odd too. Stuart assumes a baseline production growth rate for 2006 of 1%. But in accounting for the impact of an embargo, he compares against a "trend" based growth rate of 3%. So he is already assuming a 2% shortfall even without an Iranian embargo. This is how a 5% loss of world production capacity (which as noted is too high, it should be more like 3.2%) becomes a 7% "supply change". In effect I think this is assuming that 2006 is already going to be a crisis year - perhaps a popular assumption around here but far from mainstream.

If we redo the analysis with these two changes we find that the impact is less than half of the 7% that Stuart got, and if we then follow Stuart's assumption that elasticity is nonlinear, we get that there should be less than a 50% increase in prices from even a total Iranian embargo. This would put oil in the $80-90 range.

Another thing the analysis did not consider was the possibility of spare OPEC capacity coming into production to partially make up an Iranian shortfall. The IEA's latest report, http://omrpublic.iea.org/currentissues/full.pdf page 14, shows  spare OPEC capacity of 1.44 mbd not counting Iraq. The IEA also expects spare capacity to continue to increase through 2006. The current level would cover half of Iranian exports.

In the event of an Iranian embargo it is also possible that the U.S. could focus even more intensive efforts on reviving Iraq's oil production capacity, which the report estimates could add another 0.80 mbd for a total of 2.24 mbd. This would cover most of the 2.55 mbd currently exported by Iran.

(They define spare capacity as levels that "can be reached within 30 days and sustained for 90 days".)

Clearly these last two factors are more speculative, particularly any improvement in Iraqi production, but it is not too much of a stretch to imagine Saudi Arabia and other OPEC countries increasing production in order to calm oil markets (which would undoubtedly show at least short term spiking in response to any such Iranian action). They've done it many times before and according to the IEA they do have modest levels of spare capacity that they could bring into production if necessary.

Does anyone have an MP3 or transcript of the programme?

I get an error here from Real Player (my version is quite old and I'm behind a corporate firewall).

Thanks in advance.

Nice to hear your voice again Stuart.

It's good to see other people (outside the Peak Oil sphere) acknowledging TOD importance.

All Iran's oil production would be lost and they would be importing oil by truck if we went to war with them. But their consumption would also reduce, so it's more like the lower figure.