Peak oil is the point in time when the maximum rate of petroleum extraction is reached, after which the rate of production is expected to enter terminal decline. Every oil well and field exhibits similar characteristics of being discovered, the logistics to extract the oil being put in place, a peak or plateau of production followed by a decline. US domestic oil production peaked in 1970. Global production of conventional crude oil fell from a high point in 2005 at 74 mb/d, but has since rebounded, and 2011 figures show slightly higher levels of production than in 2005. There is active debate as to how to measure Peak Oil, and which types of liquid fuels to include.

This concept is based on the observed production rates of individual oil wells, projected reserves and the combined production rate of a field of related oil wells. In order to understand physical Peak oil, the growing effort for production must be considered. Physical Peak oil occurs earlier, because the overall efforts for production have increased in the past few decades.

An oil is any substance that is liquid at ambient temperatures and does not mix with water but may mix with other oils and organic solvents. This general definition includes vegetable oils, volatile essential oils, petrochemical oils, and synthetic oils.

First attested in English 1176, the word oil comes from Old French "oile", from Latin "oleum", which in turn comes from the Greek "ἔλαιον" (elaion), "olive oil, oil" and that from "ἐλαία" (elaia), "olive tree". The earliest attested form of the word is the Mycenaean Greek e-ra-wo, written in Linear B syllabic script.

Organic oils are produced in remarkable diversity by plants, animals, and other organisms through natural metabolic processes. Lipid is the scientific term for the fatty acids, steroids and similar chemicals often found in the oils produced by living things, while oil refers to an overall mixture of chemicals. Organic oils may also contain chemicals other than lipids, including proteins, waxes and alkaloids.

Lipids can be classified by the way that they are made by an organism, their chemical structure and their limited solubility in water compared to oils. They have a high carbon and hydrogen content and are considerably lacking in oxygen compared to other organic compounds and minerals; they tend to be relatively nonpolar molecules, but may include both polar and nonpolar regions as in the case of phospholipids and steroids.