How a Country the Size of Vermont Will Dominate the 2016 Oil Market

The world oil market is typically dominated by countries with the most land.

The three largest countries by land mass are Russia, Canada, and China, respectively. They’re all among the top five largest oil producers in the world. Russia produces 10.9 million barrels per day, ranking third behind the United States and Saudi Arabia.

But many smaller countries also benefit from high oil production. In fact, one tiny nation could end up changing the oil market forever.

You won’t hear it mentioned in any conversations about oil exploration today. But it sits on more than 25 million barrels worth of oil reserves.

And it’s smaller than the state of Vermont.

Here’s how these small countries become players in the global oil market…

How the Oil Market Operates Throughout the World

The worldwide oil market is a massive interconnected highway of imports and exports that grows larger each year.

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According to the BP Statistical Review of World Energy, global oil trade activity increased by 1%, or 490,000 barrels per day, in 2014. Exports have swung from West to East in recent years, with China becoming the world’s largest oil importer last year.

Even at that rate, consumption still couldn’t outpace production. World oil production rose by 2.1 million barrels a day last year. All of the growth occurred in non-OPEC countries, with record U.S. and Canadian output increasing by 1.6 million and 310,000 barrels a day.

But the biggest surprises in the oil market last year came from the smallest countries. These are the producers we never hear about in the news when we see oil supply surging and oil prices declining.

Qatar is one of the smallest countries in Southwest Asia, dominating a modest 4,473 square miles of land area. According to the U.S. Energy Information Administration (EIA), it was the 14th highest-producing country in the world last year.

Kuwait – the 77th smallest country in the world – produces 2.8 million barrels of oil per day. It also enjoys OPEC membership, alongside neighboring Iraq and Saudi Arabia.

But now there’s a country the same size as one of the smallest U.S. states that could soon become a key terminal for imports and exports.

Here’s just how significant this country could be to the global oil market…

This Tiny Nation Could Change the Global Oil Market

The Central American country is Belize.

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On May 7, Belize’s Ministry of Energy drafted a proposal that would open the country to oil exploration and offshore drilling for the first time. It would allow drilling near the Great Blue Hole (pictured right), a world-famous scuba destination that can be seen from space.

The move would be significant due to Belize’s location near huge and proven oil reserves.

It’s situated just south of the Gulf of Mexico’s Yucatán Peninsula, where about 51 million barrels of oil reserves have been discovered since 1992. That’s more than the combined daily production of neighboring Honduras, Nicaragua, and El Salvador.

According to a report by the Oceanography Society (TOS), 38 oilfields have sprouted up in the region since then, with eight forming in the last two years alone.

Belize also just recently discovered the Spanish Lookout and Never Delays oil fields belonging to Belize Natural Energy Ltd. The company reported that both have reserves in the range of 25 million barrels.

But many local environmentalists are outraged over the exploration initiative. Experts say even a small oil spill would jeopardize Belize’s tourism industry, which makes up nearly 25% of the country’s annual GDP.

“They’ve declared open season on almost 99% of Belize’s marine area,” explained Janelle Chanona, vice president of Belize’s chapter of the ocean conservation organization Oceana, to The New York Times. “That includes seven World Heritage sites, that includes marine protected areas… and it is unacceptable.”

While there are hurdles to pass before drilling begins, including final government approval and petroleum licenses, one thing is for sure – Belize could become a major export player within the next few years.

What are your thoughts on Belize’s oil potential? Talk to us on Twitter at @AlexMcGuire92 and @moneymorning.

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