Monkey and VladVlad stated "At the end of the day when investment is cut it takes between 2 and 5 years for the impact to be felt in production terms, depending upon the type of oil field in question. The same 2 to 5 year delay also applies in the opposite direction of course when investment increases again".
As the price of oil increases we could very well see production spike as all the fields that have been abandoned at sub-$50 oil come on stream again and this could cause the price of oil to rise in a step-wise fashion for a couple of years. The real crunch will not occur until the industry is forced to replace production from exploration. Then we could see a major spike in the price of oil, but this will not occur for a number of years. The idea that the ramp up of production will take 2 - 5 years is a bit of a myth. As the price of oil rises, which it will, I expect to see regular spikes in production over the short term until all the low hanging fruit is picked.
Monkey
The one thing that all of commentator agree on is that global spare capacity is at record low, perhaps 1% only. Virtual no well is abandon, low price effect opposite. Most of cost in well is not in pumping, it in explore, drill after the care, overhead etc etc. Even at heavy loss it be beneficial to pump for cash flow reason, only way to survive.
Reason production not fall fast yet in spit of global rig count halving is that all pump like billy o, at a loss yes, but cash flow allow survival during slump for most at least, those who go bust, producing asset purchase cheap on market, no bankrupt oiler has had its assets shut off by new owner that Vlad know of unless specific problems - losses always the greater if you stop the pump during slump - Vlad the poet.
Even routine maintenance often abandoned over past 2 year to keep cash pump going.
Now we 2 year in we will see depletion increasingly do of its thing, just the watch this happen.
Trust the Vlad, shale has the small number of reserve wells prepped pre slump, most brought on line already but a few the remain worth c150k bpd output max, other than Saudi c1M b/d spare capacity there is nothing, there be no reserve production spike when price rise. Nothing to save global economy from high of oil price Vlad the afraid, make max profit on oil sector of recovery, the pickings they be thin thereafter for a good the while.
Vlad