Oil price16 Oct 2025 13:42
Much as I enjoyed the discussion between Hunbah and Stevo I feel it missed the overriding picture. Both clearly know their stuff and most of us could only watch from the shallow end.
There are always area of debate and if this is just the accounting and tax intricacies imagine trying to sort out seismic and geological data. Wind and solar are free and you could argue that oil and water is too for those lucky enough to have it. The cost is in getting it to the user/consumer and fossil fuels still win that race despite the handicaps they are forced by governments to carry. O&G has enormous infrastructure and is presently irreplaceable and still provides ¾ of our energy and essential goods (esp. medical, fertilizer). In fact, Kathryn Porter says oil is almost too valuable to burn.
Oil is NOT going to go lower for long. As much as we are under attack from Ed and his green fantasies if governments force oil producers to the wall they’ll cease producing here and/or move to friendlier hosts. I played with AI asking for break even which is a ridiculous question because even Saudi Arabia comes up with $90-$100 but that is a ‘fiscal balance’ price. We are told that oil almost leaps out of the ground there, yet they still need the equipment, labour, ships, insurance, banking, infrastructure etc.. The same applies to the US: Operating breakeven costs are often in the $50s to low $60s per barrel (WTI). For the very largest, integrated producers with high capital commitments, breakevens (including all obligations) might push toward $80–$100+ in some cases and even that despotic petrostate Norway can’t avoid them. For example the Goliat field:
One academic estimate puts its breakeven closer to US$75/barrel, though its operator claims lower. The difference depends on what costs are included.. The actual numbers would keep Stevo and Hunbah going for months. Do you include this but not that. Are you comparing cement to silk?
New large fields are cheaper to run but old ones also have a value, and it is a mixture. Pretending that Harbour and Serica can do it more cheaply just isn’t true. A good field may give you an advantage but there isn’t a huge difference in what you pay the rigger or insuring the load. The present price of oil threatens US production profitability, so I expect it to stop around here with a possibility of bouncing higher because of future ‘events’. If you go below this price level companies halt production and reduce capex which fuels the next rise. One thing about Magnus. I’d be very happy if we reached the target whereby we stop sharing any profit with BP because it means we have maxed out with the field.
Our biggest problem is DESNZ, the CCC and the Labour government. Luckily, they seem to be isolated and almost everybody else has backed away from the green fantasy and its costs.
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