Some More Thoughts On Oil
To add some light on my post about the two scenarios I believe could unfold in the oil market I have found some very interesting information. Below is the 2009 breakeven price/barrel for some of the top oil producing countries.
- Bahrain – $84
- Kuwait – $34
- Oman – $78
- Qatar – $24
- Saudi Arabia – $54
- UAE – $24
- Algeria – $60
- Azerbaijan – $35
- Iran – $90
- Iraq – $94
- Kazakhstan – $67
- Libya – $53
These numbers are simple breakevens that were compiled by dividing the countries oil sales into their 2009 projected budgets. If they plan on keeping their budgets the same these are the breakevens they will need to not run a budget deficit. I have yet to see very many governments that slash spending due to being short on funds, but this whole deal could come into play as part of the reason these countries might decide to shut down oil wells until prices rise. It also will have a huge impact on world growth. These countries and Russia are kind off like American farmers. Ever farmer I talk with the last twelve months wanted to talk about how much stuff they were going to buy, or how much stuff they were going to build now that corn was $5. Now those guys have been forced to pull way back on their wish list and sit on the sidelines hoping they are going to be able to make it another year. These oil countries are no different. I m sure they all had big plans for expansion but will now have to scale back on these plans until better days in the oil business.
Erik
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