According to Oil and Gas Journal (OGJ), the Iberian Peninsula had a combined 150 million barrels of proven oil reserves in January 2007. Oil consumption in 2006 stood at 1.89 million barrels per day (bbl/d), with Spain contributing the bulk (84 percent) of that amount. Even though oil consumption has increased in absolute terms over the past two decades, its percentage of total energy consumption has declined. Due to the lack of significant domestic oil production, Spain and Portugal depend upon oil imports, with the largest suppliers including Russia, Libya, and Saudi Arabia.

The largest oil company in Spain is Repsol-YPF, created in 1999 through the merger of Repsol, the former, state-owned oil company of Spain, and Yacimientos Petroliferos Fiscales (YPF), formerly owned by the Argentine government. The combined group is one of the world's largest integrated oil operators, with activities in over 28 countries. After Repsol-YPF, Cepsa is the second-largest oil company in Spain. Cepsa has exploration and production activities in Algeria and Colombia, with future expansion planned in Yemen and Iran. The Compania Logistica de Hidrocarburos (CLH) is a private holding company for the domestic oil and petroleum products transportation system. Ten oil and gas companies hold shares in CLH, the largest being Enbridge, Respol-YPF, and Cepsa.

The largest oil company in Portugal is Petrogal, a wholly-owned subsidiary of Galp Energia. Galp Energia is owned by the Portuguese government and a collection of international oil and gas operators. Petrogal controls the domestic midstream and downstream oil sectors in Portugal, and it also maintains modest production activities in Angola and Brazil. In October 2006, the government completed an initial public offering of Galp shares that earned the government $1.4 billion, though it still continues to hold a small amount of Galp shares.

Spain produced only 3,000 bbl/d of crude oil in 2006, while Portugal had no commercial production. According to OGJ, Spain has seven active fields, all operated by Repsol-YPF: Alga, Ayoluengo, Barracuda, Boqueron, Casablanca, Chipiron, and Rodaballo.

According to OGJ, Spain has nine oil refineries with a combined capacity of 1.27 million bbl/d. The largest facility in the country is Cepsa's Cadiz refinery (240,000 bbl/d), though Repsol-YPF controls the largest refining capacity of any single company. Repsol-YPF and Cepsa also have joint ownership of a bitumen plant, Asesa, located at the Tarragona refinery.

Portugal has two refineries, both operated by Petrogal. Located in Sines and Porto, the facilities have a combined capacity of 304,000 bbl/d. Petrogal also controls the retail market for refined oil products and operates the country's oil pipeline network.

According to the Spanish Association of Alternative Energy Producers, biofuels represented 0.53 percent of transportation fuel sales in Spain in 2006. Ethanol represented the bulk of this total, followed by biodiesel. The group also reported strong biodiesel exports to the rest of Europe. In March 2007, Natura opened a new biodiesel plant in Ocana, with a production capacity of 2,000 bbl/d.