Profitable Price of Oil

The chart below are from the most recent weekly e-letter from John Mauldin.  Something that I have been speaking to recently is the idea that oil cannot sustainably remain low, if for no other reason because oil producing countries cannot maintain their balance sheets with oil as cheap as it is now.  The chart below shows the price at which each oil producing country needs to sell its oil in order to balance its national accounts.

As John intelligently points out, this does not imply that oil cannot go lower from here, but this point certainly creates are compelling argument for tremendous upside to oil once global slowing eases. The entire letter is worth reading, and is available at Investors Insight.

Price of Oil Needed to Balance Budget

Some Things That Just Should Not Be
John Mauldin, Investors Insight, December 12, 2008


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