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2008-10-12 Home Front Economy

Various Gulf OPEC producers break even price

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Posted by 3dc 2008-10-12 01:50|| || Front Page|| [5 views ] Top

#1 I assume these are the prices that keep state budgets in balance and not break even production costs. SA's production cost is about $4/barrel.

Posted by phil_b 2008-10-12 03:35|| 2008-10-12 03:35|| Front Page Top

#2 The Russian budget break even is when oil is in the $70s/barrel.

Posted by ed 2008-10-12 08:41|| 2008-10-12 08:41|| Front Page Top

#3 Oil finds platform for high price
For all Opec producers, including the low-cost Gulf exporters for whom marginal costs barely register as a concern, the price floor is also determined in a large part by budgetary obligations, which have ballooned amid record prices. Investment in grand projects such as Saudi Arabias economic cities and Venezuelas welfare programmes was spurred by high oil prices, and Opec will seek to ensure that prices remain high for those projects to be completed.

According to a report by PFC Energy, a consultancy based in Washington, Saudi Arabia will need prices to stay above $62 a barrel to balance its budget next year.

The Saudis fiscal needs pale in comparison to other Opec members, however. PFC said the Venezuelan budget required a minimum price of $97 next year, while Nigeria will look for prices to stay above $71.

The UAE, Kuwait and Qatar have much smaller budgetary obligations compared to oil revenues, and analysts estimate they need prices to stay only in a range of $30-$50 a barrel.
...
In March, Ali al Naimi, the Saudi oil minister, estimated that oil prices would have to remain between $70 and $80 a barrel in order to make biofuels cost-effective. He characterised the price range as the absolute price floor of the oil market.

Posted by ed 2008-10-12 09:31|| 2008-10-12 09:31|| Front Page Top

#4 Cutting production also takes a big wet bite out of their arses. So it seems they might be screwed either way. :)

Posted by bigjim-ky 2008-10-12 10:23|| 2008-10-12 10:23|| Front Page Top

#5 Production cut = higher price which in turn = lower demand which in turn = less revenue to the OPEC dummies. Look at 70's when Nixon and Carter both tried forms of price control. In a recessed or contracting economy they are cutting off their noses in spite of their faces.

Posted by Jack is Back!">Jack is Back! 2008-10-12 10:48|| 2008-10-12 10:48|| Front Page Top

#6 So...if you are Iran and gas is $90.01 a barrel and you depend on oil revenue to maintain government stability. What could possibly happen to raise oil prices if OPEC won't cut production?

Posted by Heriberto Whusogum3364 2008-10-12 11:08|| 2008-10-12 11:08|| Front Page Top

#7 Yeah, it's trending that way, isn't it.

Posted by lotp 2008-10-12 13:00|| 2008-10-12 13:00|| Front Page Top

#8 Phil, yes. The Caracas robolution requires +72.

Posted by .5MT 2008-10-12 13:03|| www.cybernations.net]">[www.cybernations.net] 2008-10-12 13:03|| Front Page Top

#9 Robolution is also priced at the Margins.

Posted by .5MT 2008-10-12 13:03|| www.cybernations.net]">[www.cybernations.net] 2008-10-12 13:03|| Front Page Top

#10 Seems to me that $60/bbl is about right. When you look at the chart I posted yesterday, It looks like the equilibrium price. In turn, the cash flow dummies, like Iran, fold. It is not a bug, it's a feature. Petroleum energy independence destroys thugocracies without firing a shot. Good Sun Tzu. control the battle space. Alimentary, my dear Watson.

Posted by Alaska Paul 2008-10-12 15:59|| 2008-10-12 15:59|| Front Page Top

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