Break-Even Oil Prices: 

A revenue crash this year will separate the weak from the strong, but none of the Opec-plus states are immune to a price war.

Energy Intelligence has updated our external break-even oil prices, and the average for 2020 is $63 per barrel. Russia and most of the Mideast Gulf states still have ample savings and room to borrow. Saudi Arabia can cover its deficits by draining foreign exchange reserves and by borrowing, but it could burn its currency reserves at an ever-faster rate as revenues fall and growth slows. Compared with the Gulf states, Russia is more resilient to lower oil prices, thanks to a flexible exchange rate as well as large currency reserves. If prices remain below $40/bbl, countries including Algeria, Iran, Oman, Iraq and Angola are all at risk of balance of payments or debt crises. 

The latest memo from our Research & Advisory group includes:
•    Break-even estimates for the Opec states plus Russia, Kazakhstan, Qatar and Oman
•    Sources of strength and weakness for Saudi Arabia, Russia and others
•    Analysis of how major producers respond to oil price declines

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