This paper reviews oil and gas worldwide supply and demand and their effect on oil prices and consequently on related industries such as refining, drilling technology, enhanced oil recovery, natural gas liquefaction,..etc. The proved oil reserves in the world is about 7×1011 bbl with about 56% located in the Middle East. The worldwide natural gas reserves is estimated as 3.484×1015 ft3 with 43% located in U.S.S.R and 25% in the Middle-East. The heavy oil reserves is estimated as 5.8 – 5.9×1012 barrels with 72% located in Venezuela. The bitumen reserves is estimated as 200 billion barrels with 82% located in Canada.

In 1979, oil production reached it's peak of about 66×106 bbl/day out of which 21.91×106 bbl/day was produced from the Middle East. Then the demand for oil declined till 1985. An increase in the demand was reported in early 1986. About 25% of oil produced was consumed by U.S.A., 21% by Western Europe, 15% by U.S.S.R. and 7.5% by Japan. Oil tankers, especially supertanker, and refining industries were suffering in the last several years as they were operated at rates less than their capacities. Oil prices declined since 1982 and collapsed in 1986. Such reduction in oil price, if sustained, is expected to hurt drilling activities, enhanced oil recovery projects which may result in less supply and declining reserve and consequently a big hike in oil prices in the future. Among different sources of energy, oil has proved to be the main source of energy for worldwide consumption.

The demand for gas is increasing. The production in early 1986 reached a rate of 190×109ft3/day with about 35% produced from U.S.S.R and about 25% from U.S.A. The main consumers of natural gas are U.S.S.R., U.S.A., Japan and Western Europe. U.S.S.R. supplies Western and Eastern Europe with most of their needs of natural gases.

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