Deutsche Bank’s emerging markets research desk has updated their estimates for the prices of oil per barrel that various oil-producing countries need in order to “break even” on budgets. In a note to clients this morning, commodities strategist Xiao Fu writes that these numbers provide “important guidance of the pain threshold for major oil producers.”
Here are the new estimates:
Photo: Deutsche Bank
Saudi Arabia and the UAE are poised to benefit while others take a hit. Xiao Fu writes:
These “breakeven prices” have risen substantially in recent years as increases in public spending have outstripped the rise in oil prices…The average breakeven price in GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates) will edge down to about USD 80bbl this year, the first drop since 2003. The improvement in breakevens is limited to Saudi Arabia and UAE, however, where some of the large one-off increases in spending that pushed up breakevens last year are set to be unwound this year. Elsewhere in the GCC, increases in recurrent spending, partly in response to the Arab Spring, will see breakeven prices continue to edge upwards.