Tuesday, February 28, 2017
#Saudi needs #Oil at $60 per barrel - it is stalling
Oil closed at $56.40 per barrel yesterday. North America is still trading. So despite the cuts by OPEC and Russia, oil has serious resistance to hit the $60 per barrel which Saudi needs.
I was skeptical about the oil when OPEC agreed for the cuts. USA and Canada have massive deposits and did not sign on.
Some of you will remember the TOTAL CEO saying last year that Total needed the barrel to be at $67 to break even.
What is interesting is Saudi Arabia has the lowest cost per barrel to break even. The last time I checked, their break even price was $8.95 per barrel.
This brings up something I have written about in the past. Oil producing countries do not go for the break even price per barrel. They look at the Break even price based on what they planned to sell oil at for their national budget.
This is one of the reasons even none OPEC members agreed to cut down production. Countries have been running deficits because of oil. One only has to look at Venezuela and Nigeria who are in OPEC. Middle East countries have also suffered from low oil prices.
Then my long time followers will remember that Uganda had set its Break even at $168 per barrel. I thought it was a stupid number till I realised that it was budgetary.
Uganda even has no refinery but they will likely package crude in jerry cans and send it by road or railway to Zambia. The country has heniuses. Their president is on record fetching water in a jerrycan on a bicycle to drip irrigate his one acre of cassava. Temuli baavu.
Martha Leah Nangalama
Jerrycans and bicycles are wonders in this modern age. Stay tuned.