IEA: Oil Companies Need More Realistic Break-Even Point

Oil companies should scrap lowball price forecasts that are keeping them from investing in new oil fields, the head of the International Energy Agency said Wednesday. Years of underinvestment from when oil prices bottomed out has whittled down global oil spare production capacity to under 2%, supporting economically damaging higher prices.

International oil companies use conservative estimates of $20-$25 a barrel of oil as the break-even point for assessing new projects – when oil’s trading at double that and not likely to fall again, Claude Mandil told Dow Jones Newswires.

Rigzone.com