- May 01, 2023, 4:00 PM CDT
At the same time, Russia is fighting to take market share from OPEC producers by helping to push prices higher while selling its oil at a significant discount.The recent comment by the Secretary General of the Organization of Petroleum Exporting Countries , Haitham Al Ghais, that the International Energy Agency should be “very careful about further undermining” oil industry investments highlights the ongoing war between the big net buyers of oil allied to the U.S.
On the other side of the oil price equation is the U.S. and its principal economic and security allies both in Europe and Asia. For these countries that are net importers of oil and gas, sustained oil prices above US$80 pb of Brent, and corollary rising gas prices, mean that inflation will remain higher for longer, which will keep interest rates higher for longer, which will increase the economic damage done to them. For the U.S.
So, what about Russia, the significant ‘+’ part in ‘OPEC+’? For many years up to its invasion of Ukraine in February 2022, Russia had a fiscal breakeven price per barrel of Brent of around US$40. This was for a long period about the same as the level at which U.S. shale producers can make decent profits and around half of Saudi Arabia’s longstanding fiscal breakeven oil price.