Member nations with the Organization of Petroleum Exporting Countries (OPEC) are feeling the financial stress created by low oil prices and many, such as Equador, are now pumping oil at a loss.
As reported by FuelFix, earlier this week Ecuador President Rafael Correa said that while production costs average about $39 per barrel, the country is fetching as little as $30 per barrel for its crude. The statement, which some might heed as a warning, comes after several OPEC members, including Algeria and Libya, called for an emergency meeting to address the drop in oil prices. In a speech, Correa said, “We are going through a very difficult year economically because the price of oil collapsed.”
Following concerns regarding China’s financial sector, the persisting oil price slump and the growing supply glut, international benchmark Brent crude prices fell to a six-year low of less than $45 per barrel. According to OPEC, the average selling price for the group’s crude is $40.47. By output, Ecuador is OPEC’s second-smallest member with production levels of 538,000 barrels per day for last month. On Wednesday, the country’s crude blend sold for $36.32 compared to $43.21 for Brent crude, a higher quality blend.
Other OPEC members are also fetching prices below the Brent benchmark due to the crude being a heavier weight or containing more sulfur. According to data compiled by Bloomberg, Saudi Arabia sells several grades of crude at prices from $37 to $39 per barrel to U.S. buyers, and Iraq blends can sell for as low as $34 per barrel.
According to the International Monetary Fund, both Algeria and Libya need about $120 per barrel to cover government spending plans, and Kuwait can make due with less than $50. Saudi Arabia, on the other hand, needs around $100 per barrel to balance its budget. However, the state finds some padding with minimal debt and foreign exchange reserves.
In a letter written to fellow OPEC members, Algeria Energy Minister Salah Khebri called for the group to consider taking action to reverse the oil price slide, including holding an emergency meeting, according to two sources familiar with the letter. Venezuela President Nicolas Maduro also recently announced that the nation is contemplating whether or not to call for an emergency meeting.
The world’s second largest oil exporter and OPEC ring-leader, Saudi Arabia, however, has not responded to any of the calls for an emergency meeting. OPEC produces approximately 40 percent of the world’s oil and last year, to defend its market share, the group made the decision to not cut output as oil prices began to sink. The group’s next regular meeting is scheduled for December 4 in Vienna.