Price May Make Oil Unviable

If oil prices keep falling, at some point it’s not profitable to pull it out of the ground. But we’re not there yet, according to an analysis of production costs by an energy consulting firm.

In fact, even if the Brent price index falls another 20 percent from Friday’s closing price—to $40 a barrel—just 1.6 percent of the world’s oil supply would represent unprofitable production.

Energy consultant Wood Mackenzie analyzed production data from 2,222 oil fields around the world to see just how much further oil prices would have to fall to make them “cash negative”—costing more to operate than the oil is worth. That price can act like a brake on production, according to Wood Mackenzie analyst Robert Plummer.

CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.