Who Needs High Oil Prices?

Saturday, February 8, 2014

Click on the image to see it larger.

This chart shows what oil prices are necessary to sustain different types of crude production. So, for instance, countries in the Middle East and North Africa can keep pumping out oil at a profit even when prices drop to $30 a barrel.

It's a different story in the United States, however. Production of "light tight oil," like that in North Dakota and Texas, typically requires higher prices (between $50 a barrel and $100 a barrel).

The flip side, however, is that many OPEC countries need high prices to sustain the social spending they've ramped up in recent years. By some estimates, Saudi Arabia needs oil prices to stay at about $82 a barrel to maintain its current budget. Iraq needs prices around $104 per barrel. Russia's "break-even" point might be even higher. So there are a lot of nations that would actually prefer to keep prices high.

The above is excerpted from an article in the Washington Post entitled, How the Oil Boom Could Change U.S. Foreign Policy.

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