Energy and natural resources
Fiscal breakeven oil price
The oil price a government needs to balance its budget.
Last reviewedWhat 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.
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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.