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World oil markets go into crisis

18 November 2008 13:23 (UTC +04:00)

Baku. Vahab Rzayev â€“ APA-Economics. While oil prices dipped to a 22-month low, OPEC slashed its forecast for growth in oil demand for next year in response to worsening economic conditions, giving ammunition to members pushing for a cut in production at next weekâ€™s meeting in Cairo.
The group said on Monday the worldâ€™s appetite for oil will grow by 500,000 bpd next year, which represented a downwards revision of 300,000 bpd compared to last monthâ€™s forecast. Oil demand this year grew 290,000 bpd, the report said, a decrease of 260,000 bpd compared to last month.
Opec said the world will need 30.9 million bpd of its crude next year, compared to the IEAâ€™s estimate of 30.6 million bpd. If Opec follows through on its planned move to cut 1.5 million bpd of production from the 32.2 million bpd it pumped in September, it will be producing less oil than it says is needed to balance the market.
According to the 2008 IMF Regional Economic Outlook for oil exporters, the average break-even oil price for the fiscal accounts (i.e., the price at which a country would achieve a fiscal balance) is US$57 per barrel in 2008, demonstrating that most oil exporters can easily absorb lower world oil prices.
Exceptions include Iraq, which is expected to run a small fiscal deficit with the current oil price levels, and Iran, where the fiscal position may turn into a deficit if oil prices dip below US$90 per barrel.
According to the IMF staff estimates and projections, the critical level for Azerbaijan is US$40 per barrel.

Oil Exporters’ Break-Even Prices for 2008 Fiscal Account	In U.S. dollars/barrel
United Arab Emirates	23
Qatar	24
Kuwait	33
Azerbaijan	40
Libya	47
Saudi Arabia	49
Algeria	56
Kazakhstan	59
Bahrain	75
Oman	77
Iran	90
Iraq	111