Bloomberg News

Iran Needs Highest Oil Price Among OPEC for Budget, Apicorp Says

July 26, 2013

Iran needs the highest oil price among OPEC members to balance its 2013 budget, according to an inter-governmental Arab energy lender.

Iran requires an average crude price of $144 a barrel this year to break even, up from $127 last year, the Arab Petroleum Investments Corp., known as Apicorp, said today in an e-mailed report. Saudi Arabia, the largest producer in the Organization of Petroleum Exporting Countries, will need a lower $98 to balance its budget, according to Apicorp. The kingdom needed $94 last year, the lender said.

The weighted-average oil price to break even this year’s budgets for the 12 members of OPEC is estimated at $105 as the group’s combined budget is set to grow by 7 percent this year, the bank said. OPEC needed $99 last year, it said. Benchmark Brent crude, used to price more than half the world’s oil, averaged about $108 this year.

“The ultimate point is that no OPEC member can expect to set expenditures that depend on other members surrendering market share,” Ali Aissaoui, a senior consultant at the bank said in the report. “Countries would be more likely to spend what they could afford.”

With the exception of Kuwait, all members require higher break-even prices this year than a year earlier, the Khobar, Saudi Arabia-based bank said.

Iraq, OPEC’s second-largest producer, needs an oil price of about $123 this year, $10 more than 2012, according to Apicorp. Venezuela, Algeria, Libya, Nigeria and Ecuador all required prices above $110 to balance spending plans, it said.

Saudi Oil Minister Ali al-Naimi said on May 31 in Vienna that Brent at about $100 is a fair price. The kingdom’s budget is based on an average price of $75 a barrel and an export rate of 7.2 million barrels a day, Fahd bin Jumah, a member of the Shura Council that advises the king, wrote in Riyadh newspaper on July 23.

The break-even level represents the price wanted by the government and is usually different from the actual cost of production for oil.

To contact the reporter on this story: Wael Mahdi in Manama at wmahdi@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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