Capacity constraints and inflation will see average break-evens remain elevated through mid-decade
Energy Intelligence’s updated external break-even price modeling — part of our proprietary long-term supply/demand forecasts — indicates that the 2022 average Opec-plus external break-even fell to about $72 per barrel.
Sustained high prices in 2022 pulled this year’s average external break-even prices lower than previously predicted. However, we expect inflationary pressures combined with capacity constraints among vulnerable producers to keep break-evens elevated through the end of the forecast period.
The Mideast Gulf led by Saudi Arabia, the UAE, and Kuwait are benefiting the most as added supply pushed current account surpluses higher. Although each will see an increase in its 2023 break-even, they will remain below our Brent forecast for the year.
Russia previously had some of the lowest break-even prices in the group, but we expect this figure to climb as oil production stagnates and Moscow is increasingly cut off from European gas markets. Although its break-even is expected to remain below our Brent price outlook for the forecast period, the Russian economy has significantly less breathing room than it did in the past.
Producers like Algeria, Kazakhstan, Nigeria and other West African producers are likely to feel much more pressure on their current account balances without significant policy shifts toward the mid-decade
Energy Intelligence’s External Break-Even Price Update is a proprietary analysis of the average external break-even price—which measures the oil price needed to pay for imports and balance external accounts—needed by the Opec-plus group.
You can learn more about the External Break-even Price Update – and our Risk Service – in the full report download.
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The External Break-Even Price Update is part of the Risk Service which helps the oil and gas industry mitigate risks and capture opportunities at the nexus of energy, politics and energy transition. We deliver a combination of news, analysis, data and research to help clients secure new investment opportunities and mitigate traditional and emerging aboveground risks.