World oil production. Source: Graphoilogy using US EIA data
Near record oil prices (at $110-115/bl, WTI is at its highest ever except for a few weeks in July 2008) suggest that markets continue to be worried about tightness of supply. While some of that is linked to the disruption to Libyan oil production, there is a growing awareness that (i) the supplies of cheap oil are dwindling, and (ii) it is increasingly difficult for supply to follow demand growth.