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Page added on June 2, 2012
Oil Prices Fall Below Break-Even for Several Nations
Following is a table of some OPEC producers’ fiscal breakeven oil prices:
$/bbl Algeria 105 Iran 117 Iraq 112 Kuwait 44 Libya 117 Qatar 42 Saudi Arabia 71 UAE 84 Sources: National authorities and International Monetary Fund
The above table is from an article dated 1 June 2012. Scan the graphs below for images of break-even levels from May 2012 and December 2011. Notice that the estimated break-even levels tend to fluctuate. It is likely that most of those published levels are underestimates.
In Russia, for example, the most recent estimate for break-even price level is $117 per barrel. But Russian insiders estimate the true break-even level is closer to $150 a barrel — particularly with Putin’s ambitious new re-building schemes.
Citibank expects that Russia will have a very turbulent next five years, given their estimate that Brent crude prices will likely settle close to $85 over that time period.
Oil producers are beginning to feel the future threat of peak demand for oil caused by multiple factors — including unconventional liquid fuels — breathing down their necks. For oil to sell in the coming markets, producers will have to price their product to be competitive.
For some quasi oil dictatorships such as Iran, Venezuela, and Russia, reduced revenues to support ambitious government spending could lead to intemperate, perhaps violent, actions, geared to force oil prices much higher. They will require a close watching.
6 Comments on "Oil Prices Fall Below Break-Even for Several Nations"
MrEnergyCzar on Sat, 2nd Jun 2012 11:40 pm
Iran is in trouble then…
MrEnergyCzar
BillT on Sun, 3rd Jun 2012 1:34 am
And the news is? Ho hum…
Grover Lembeck on Sun, 3rd Jun 2012 3:49 am
When did the break even price for the Saudi’s become $80 a barrel?! To he’ll with “ho, hum”, how is that response rational, here? Apparently your life requires no gasoline, because in my world, I have 0 disposable income due to gas prices- and for business, it is essential that I drive.
For the time being.
What this means is, I can expect NO relief in the form of lower gas prices, and will have to make changes if I ever want to be anything but a slave to my truck. Gas prices will not be getting cheaper, and will certainly be going up. There are more people in my situation than there are saying “ho, hum”, I assure you. A lot more.
Kenz300 on Sun, 3rd Jun 2012 10:55 am
The era of cheap oil is over. Deep water drilling, tar sands and oil shale all cost more to produce. Every individual, business and politician needs to develop a plan to deal with reduced energy supplies and increasing prices.
40+ mpg is better than 9 mpg.
KingM on Sun, 3rd Jun 2012 11:43 am
People are missing the point of this article. Obviously, the Saudis can produce oil at less than 80 per barrel. What they *can’t* do is balance their budgets.
Chazzoline on Sun, 3rd Jun 2012 4:12 pm
The Saudis don’t know when to quit. Maybe the Iraqis and Iranians will gang up on them later this month and convince them to slow down their pumps.