Oil producers struggle to balance budgets with low oil prices
A widely used measure of the impact of oil prices on major producers’ governments is the fiscal breakeven price. That’s “the average price at which the budget of an oil-exporting country is balanced in a given year,” according to Standard & Poor’s. Estimates of fiscal breakeven prices can vary considerably based on a variety of factors including actual budget expenditures, and differences in oil production forecasts.
For most countries oil needs to be above $100 a barrel to balance the budgets of major oil producing countries. Venezula which has major deficit problems and accelerating inflation needs oil at $151 a barrel in 2015 to balance its budget. For Iran, which has yet to agree to curb development of nuclear weapons and heavily subsidizes gasoline for its citizens, needs oil at $131 a barrel. And Russia needs oil at $107 for a chance of getting its finances in order. As for Libya a whooping $317 per barrel is required for them to start to improve their fiscal position. See graphic below.