EIA Report: Oil Headed Above $90?

Below is an EIA report showing various global oil production costs and their recent trends.

Note that U.S. offshore costs are extremely high at nearly $70 per barrel. If the data is accurate it would imply that the marginal cost of developing such fields would require a minimum oil price of at least $90 and perhaps a good deal more to provide an adequate profit. If that is true, it suggests the near term oil price is not likely to stay much below $90 for long.

The numbers are taken from a report on The Oil Drum which got them from the EIA’s Energy Finance section.

Costs of production in the Middle East are very low. However, the marginal costs are rising rapidly. Here is an article that provides some color on the difficulty and rapidly increasing cost of building any new project there, whether for increased oil production or anything else.