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How much of US oil production is unprofitable at $30/bbl?

csours 7y ago
How much of any oil production is unprofitable at $30/bbl? I don't think it is clear that even Saudi oil makes money at that price. If the Saudis haven't been trying to flood the market for the past 5 years, I don't know what they are trying to do.
- qeternity 7y ago
  The big middle east producers have cash costs around $10/bbl. They are definitely making money. Whether or not they are making enough to cover the budget necessary to keep their populace complacent is another matter.
  - toomuchtodo 7y ago
    Saudi Arabia needs $80/barrel to meet their budget, Russia around $42/barrel.
    - jessaustin 7y ago
      That's assuming output is fixed. If OPEC has failed, that's no longer the case. Since Saudi's unit costs are lower, they can dominate Russia in the long run. The global finance sector will certainly help them with that. Of course, it will be risky, but we are talking about the people who invested in Vision Fund.
      - deleted 7y ago
        [deleted]
- chasd00 7y ago
  IIRC most ME budgets are in the red with oil below about $65/bbl. Some economies can last longer than others though. SA has been trying to kill the US fracking industry for a decade but so far no luck. Once fracking came online in a big way it put a price ceiling on oil below what most ME budgets could tolerate. Once that was in place OPEC was doomed and here we are.
- deepnotderp 7y ago
  IIRC Ghawar has a production cost of something ridiculously low like $7.50 per barrel
raincom 7y ago
almost 90% of shale is unprofitable at $30/bbl
vegardx 7y ago
The simple answer is that it's complicated. You have to factor in currency exchange. In Norway we're starting to become unprofitable at around $32/bbl with the current weak NOK against USD. Some older fields are more profitable than others, so it's not like the whole sector becomes unprofitable at a single point. There are things that Norway could do in order to strengthen the NOK against USD, but this would be at the cost of other export industries, like fishing and metal, which combined are considerable export industries.

How much of any oil production is unprofitable at $30/bbl? I don't think it is clear that even Saudi oil makes money at that price. If the Saudis haven't been trying to flood the market for the past 5 years, I don't know what they are trying to do.

qeternity 7y ago
The big middle east producers have cash costs around $10/bbl. They are definitely making money. Whether or not they are making enough to cover the budget necessary to keep their populace complacent is another matter.
- toomuchtodo 7y ago
  Saudi Arabia needs $80/barrel to meet their budget, Russia around $42/barrel.
  - jessaustin 7y ago
    That's assuming output is fixed. If OPEC has failed, that's no longer the case. Since Saudi's unit costs are lower, they can dominate Russia in the long run. The global finance sector will certainly help them with that. Of course, it will be risky, but we are talking about the people who invested in Vision Fund.
    - deleted 7y ago
      [deleted]
chasd00 7y ago
IIRC most ME budgets are in the red with oil below about $65/bbl. Some economies can last longer than others though. SA has been trying to kill the US fracking industry for a decade but so far no luck. Once fracking came online in a big way it put a price ceiling on oil below what most ME budgets could tolerate. Once that was in place OPEC was doomed and here we are.
deepnotderp 7y ago
IIRC Ghawar has a production cost of something ridiculously low like $7.50 per barrel

raincom 7y ago

almost 90% of shale is unprofitable at $30/bbl

vegardx 7y ago

The simple answer is that it's complicated. You have to factor in currency exchange. In Norway we're starting to become unprofitable at around $32/bbl with the current weak NOK against USD. Some older fields are more profitable than others, so it's not like the whole sector becomes unprofitable at a single point. There are things that Norway could do in order to strengthen the NOK against USD, but this would be at the cost of other export industries, like fishing and metal, which combined are considerable export industries.