posted at 08:50
Author Name: Tomas Hirst
Saudi Arabia, OPEC And The Price Of Oil
Oil prices have fallen by over 30% since June and appear to be continuing their decline. Below is a chart from Citi Group of the fiscal break even oil prices for a selection of oil exporting countries both within and outside of the Organization of the Petroleum Exporting Countries. Unfortunately for most of the countries on that list, most forecasters now predict that the days of $100 a barrel oil are now over - at least for now. Morgan Stanley estimates that "Every $10 fall in the oil price means a $32.4 billion fall in oil and gas exports, which is equivalent to about 1.6% of GDP" and around a $19 billion fall in government budget revenues. Falling oil prices means the cost of those imports has become a lot steeper. According to state-run oil company Petroleos de Venezuela the country looses $700 million for each $1 a barrel decline in oil prices, a cost that the ailing state can ill afford. TwitterOne theory is that the Saudis are deliberately allowing prices to fall in order to fight off competition from US shale oil and maintain its share of the US market. Previously, OPEC members would agree to cut oil production if falling prices posed a threat.

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