Energy and natural resources
Fiscal breakeven oil price
The oil price a government needs to balance its budget.
Facts checked against sources onWhat does Fiscal breakeven oil price mean?
The fiscal breakeven oil price is the price at which an oil-exporting country's government revenue equals its spending, so the budget neither shows a deficit nor a surplus. It depends on how much the state spends, how much non-oil revenue it raises and how much oil it sells, so it can be far above the cost of producing the oil. Example: a government plans to spend 250 billion, raises 100 billion from non-oil sources and receives the revenue from 5 million barrels a day of exports (1,825 million barrels a year); it needs 150 billion / 1.825 billion barrels, or about 82 per barrel. The IMF publishes estimates for Gulf and other exporters in its Regional Economic Outlook.
Where does it come up in case interview prep?
Related terms
- Full-cycle breakevenThe oil price a project needs to cover all its costs, including building it, and earn its required return.
- National oil company (NOC)An oil and gas company owned or controlled by a government.
- OPEC+A group of oil-producing countries, OPEC members plus other producers, that coordinate production targets.
- BreakevenThe volume or revenue at which profit is exactly zero.
- Barrel of oil equivalent (boe)A unit that converts gas into barrels of oil by energy content, so oil and gas can be added together.
- Lifting costThe cost of producing oil or gas from wells that already exist, per barrel.
- Crack spread (refining margin)The gap between the price of crude oil and the prices of the fuels made from it.
- NetbackWhat a producer keeps per barrel after transport, royalties and production costs.
Learn it in context
See Fiscal breakeven oil price at work in a lesson from Regions for case solvers: the big markets of the world, with checks as you go.
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