OPEC Export Price Falls Below $40 for First Time Since 2009

16-Nov-2015

The average price of crude sold by OPEC fell below $40 a barrel for the first time 2009, underscoring the financial cost of the group’s strategy to defend its market share.

The daily OPEC Basket Price fell to $39.21 a barrel on Nov. 13, according to an e-mail on Monday from the organization’s secretariat in Vienna. The basket, an average of export grades from each of the group’s 12 members, typically trades below international oil futures as some OPEC nations pump denser or higher-sulfur crude that’s less profitable to refine.

Oil has slumped since the middle of last year as the Organization of Petroleum Countries keeps output elevated to pressure rivals it sees as responsible for creating a global surplus. A decline in production among its higher-cost competitors including U.S. shale drillers has now slowed, with output still above last year’s level. With OPEC members’ revenues diminished, the group may reconsider its approach if the price slump persists, according to the International Energy Agency.

Low oil prices aren’t just problematic for higher-cost producers, said Olivier Jakob, managing director at consultants Petromatrix GmbH in Zug, Switzerland. “It is also providing a challenging fiscal environment” for OPEC nations, he said. (by Grant Smith, Bloomberg)