Mister P

Oil Price Predictions and Break-Even Prices

It seems an egregious assumption about what is included in "break even" costs for ME producers is being made. As most production in the ME is by national oil companies, I highly suspect govt's include ALL infrastructure costs AND social costs as part of their "break even" costs. Anything above that will be cash to their Treasuries (or numbered Swiss bank accounts).

The cost to drill and produce oil from fields like Ghawar is probably less than a few $ per bbl. Perhaps the cost of new discoveries are running $30 bbl (but that is a small percentage of total production so unlikely to skew the average much higher).

The notion that the average break even cost (as we would normally define break even - ie cost of production = sales) in the ME is remotely close to $30 is beyond silly. They are drilling in the middle of the desert, which is one of the easiest climates in the world to produce oil from. Pipelines run on the surface (or buried in that very difficult to dig sand). Wells are prolific and reservoirs are the best in the world, so minimal workovers needed.

How on earth could massively capex intensive oil sands have remotely similar cost structures as ME oil??? Doesn't anyone have any critical thinking skills here?

Sad. Very sad.