Answers from Bing AI, just for record.
That is a good question. According to some web search results, it is true that some Middle East countries need high oil prices to keep their fiscal budgets balanced. This is because they rely heavily on oil revenues to fund their public spending and social welfare programs.
According to the **Council on Foreign Relations (CFR)**¹, an oil-exporting country’s “fiscal breakeven” oil price is the minimum price per barrel that the country needs in order to meet its expected spending needs while balancing its budget. The CFR says that fiscal breakeven prices can provide a window into the demands facing decision-makers in oil-producing countries.
According to a report by **Reuters**², based on data from the **International Monetary Fund (IMF)**, the fiscal breakeven prices for some Middle East countries in 2022 were as follows:
- Saudi Arabia: $76 per barrel
- UAE: $68 per barrel
- Kuwait: $54 per barrel
- Qatar: $45 per barrel
- Bahrain: $92 per barrel
- Oman: $77 per barrel
These figures may vary depending on different assumptions and methodologies, but they give an indication of the different levels of fiscal vulnerability among the Middle East oil producers.
As you can see, some countries, such as Bahrain and Oman, need much higher oil prices than others, such as Qatar and Kuwait, to balance their budgets. This means that they are more likely to face fiscal pressures and deficits if oil prices fall below their breakeven levels.
On the other hand, some countries, such as Saudi Arabia and UAE, have more fiscal space and flexibility to adjust their spending and revenues in response to oil price fluctuations. They also have more diversified economies and sources of income than other oil-dependent countries.
However, even for these countries, high oil prices are not a guarantee of fiscal stability. They also face challenges such as rising inflation, social demands, geopolitical tensions, and environmental concerns that may affect their fiscal performance and sustainability.
What do you think about these fiscal breakeven prices and their implications for the Middle East countries?
源: 与必应的对话， 2023/5/14
(1) Fiscal Breakeven Oil Prices | Council on Foreign Relations.https://www.cfr.org/report/fiscal-breakeven-oil-prices.
(2) Analysis: Oil price windfall tests Gulf's fiscal discipline.https://www.reuters.com/world/middle-east/oil-price-windfall-tests-gulfs-fiscal-discipline-2022-07-20/.
(3) Surging Oil Price Is Budget Boon for the Middle East’s Exporters ....https://www.bloomberg.com/news/articles/2022-02-25/surging-oil-is-budget-boon-for-the-middle-east-s-exporters.
That is another good question. According to some web search results, the main players in the oil market have increased their capex on oil production in 2023, but not by a large margin. Here are some highlights from the web search results:
- According to a report by the **International Energy Forum (IEF)** and **S&P Global Commodity Insights**¹, oil and gas upstream capital expenditures increased by 39% in 2022 to $499 billion, the highest level since 2014 and the largest year-on-year gain in history. However, this increase was driven primarily by higher costs, not by higher activity. The global rig count was up 22% from a year ago but remained 10% below 2019 levels. The report estimated that annual upstream investment will need to increase from $499 billion in 2022 to $640 billion in 2030 to ensure adequate supplies.
- According to an article by **OilPrice.com**², most oil companies have only modestly adjusted upstream budgets for 2023. The article cited a report by **Energy Intelligence** that said global upstream capex will hit $485 billion in 2023, a 12% year-on-year increase and a near 30% recovery from the 2020 trough. The article also said that non-OPEC growth will mostly be seen in the Guyana Basin, Brazil, the Gulf of Mexico, the North Sea and West Africa.
- According to a report by **Mordor Intelligence**³, the global oil and gas capex market is expected to grow at a compound annual growth rate (CAGR) of more than 5% during the forecast period of 2021-2026. The report said that factors such as increasing demand for oil and gas, technological advancements, new discoveries, and recovering oil prices are driving the market growth. However, the report also said that factors such as environmental concerns, geopolitical risks, and COVID-19 pandemic are restraining the market growth.
As you can see, there are different sources and estimates for oil production capex in 2023, but they generally suggest a moderate increase compared to previous years. What do you think about these capex figures and their implications for the oil market?
源: 与必应的对话， 2023/5/14
(1) Upstream Oil and Gas Investment Outlook 2023 Report.https://www.ief.org/focus/ief-reports/upstream-investment-report-2023.
(2) Upstream Spending To Rise To $485 Billion In 2023.https://oilprice.com/Energy/Crude-Oil/Upstream-Spending-To-Rise-To-485-Billion-In-2023.html.
(3) Oil and Gas CAPEX Outlook - Mordor Intelligence.https://www.mordorintelligence.com/industry-reports/global-oil-and-gas-capex-industry.
Shale oil is expected to have a significant impact on the global oil market in 2023, as it contributes to the supply growth outside OPEC+ and influences the price dynamics and demand outlook. According to the International Energy Agency (IEA), shale oil production from the US and Brazil will drive the non-OPEC+ supply growth of 1.9 million barrels per day (mb/d) in 2023¹. The IEA also expects the US shale oil production to reach pre-pandemic levels of 9.2 mb/d in March 2023². However, the shale oil industry faces some challenges such as rising costs, environmental regulations, and limited access to capital.
On the demand side, shale oil could affect the global oil market by influencing the price level and volatility. The IEA forecasts that the global oil demand will increase by 2 mb/d in 2023 to a record 101.9 mb/d, with jet/kerosene accounting for 57% of the growth¹. However, the demand outlook is subject to uncertainty due to the potential global recession, the coronavirus pandemic, and the energy transition. The IEA warns that the surprise OPEC+ supply cuts announced on 2 April 2023 could aggravate an expected oil supply deficit in the second half of 2023 and boost oil prices at a time of heightened economic uncertainty¹. Higher oil prices could dampen the oil demand recovery and create more room for shale oil producers to increase their output.
源: 与必应的对话， 2023/5/14
(1) Oil Market Report - April 2023 – Analysis - IEA. 网页链接
(2) Snapshot of global oil supply and demand: March 2023 - McKinsey & Company. 网页链接
(3) OPEC sees slower 2023 oil demand growth, no big shale gain. 网页链接
According to the latest Dallas Fed Energy Survey, the average breakeven price of oil for U.S. shale oil companies is **$50 per barrel**². However, this varies across different regions and operators. For example, the average breakeven price for the Eagle Ford oilfield is **$48 per barrel** for new wells and **$23 per barrel** for existing wells³, while the average breakeven price for the Permian Basin ranges from **$46 per barrel** in Loving County to **$87 per barrel** in Reagan County⁴. The average full-cycle breakeven for U.S. shale basins is approximately **$54 per barrel**¹.
源: 与必应的对话， 2023/5/14
(1) Breakeven prices for U.S. oil producers 2022 | Statista. 网页链接
(2) Breakeven Oil Prices Underscore Shale’s Impact on the Market. 网页链接
(3) The Economy of Breakeven Oil Prices - Eurasian Ventures. 网页链接
(4) US Shale Basins Boast $54/bbl Average Breakeven Price. 网页链接