What oil price OPEC and Russia need?
In order to balance their budgets, largest oil-producing countries in the world require different price of "black gold". According to Bloomberg, this leads to disagreements over the need to reduce oil production level.
Following is the latest position of each OPEC country plus Russia. The respective shares of supply are based on October levels. Estimates for the price each member needs to balance its 2016 budget are from the International Monetary Fund unless stated otherwise.
Kuwait - Price needed: $47.80. Share of OPEC production: 8.7%. United Arab Emirates - Price needed: $58.60. Share of OPEC production: 9.1%. Saudi Arabia - Price needed: $79.70. Share of OPEC production: 31%. Iran - Price needed: $55.30. Share of OPEC production: 11%. Iraq - Price needed: $58.30. Share of OPEC production: 14%. Angola - Price needed: $66.06 (UBS Group AG). Share of OPEC production: 4.4%. Algeria - Price needed: $90.60. Share of OPEC production: 3.3%. Ecuador - Price needed: $104.69 (UBS). Share of OPEC production: 1.7%. Iraq - Price needed: $58.30. Share of OPEC production: 14%. Libya - Price needed: $216.50. Share of OPEC production: 1.5%.
Russia needs the price of $69 (Natixis SA). Facing pressure to make a meaningful reduction, Russia has argued that its offer to freeze output amounts to a cut compared with next year’s plans. The country pumped 11.2 million barrels a day last month, near a post-Soviet high, and its refusal may put the whole agreement in jeopardy. Yet, Moscow has a powerful incentive to see the deal through - the price boost resulting from its engagement with OPEC has already yielded $6 billion for the cash-strapped budget, Bloomberg writes.
As deputy director of the Institute of Energy and Finance Alexey Belogoryev noted in an interview with Vestnik Kavkaza, attemps to set any specific level of oil prices at the meeting in Vienna on November 30 will be have a speculative nature, since it will mean budget cuts for these countries.
"It is clear that the dependence of different countries of OPEC and countries outside of OPEC on the level of prices is completely different. OPEC definitely won't proceed from this when it will make any decisions," the expert believes.
Associate professor of RANEPA, senior fellow of the Russian Academy of Science Ivan Kapitonov explained that the main goal that coutries will try to achieve at the meeting on November 30 is the price above $50 per barrel.
"But in reality, it is almost impossible to achieve. Right now, when Saudis behave inconsistently and refuse to negotiate, prospects are rather vague," he noted.
Sberbank CIB analyst Valery Nesterov explained that at the meeting on November 30 representatives of exporting countries will not discuss desired oil prices. They will mostly discuss whether they should cut production levels or not, freeze them or not. "But no specific results should be expected," he said.