Analysis of cost and reserves
Saudi Arabia accounts for about 15.7% of proven crude oil reserve. The BP (BP) statistical survey shows Iran and Iraq accounting for 9.3% and 8.8%, respectively, of the world’s proven crude reserve. The Saudi cost of production amounts to $9.9 per barrel. It includes $4.5 and $5.4, respectively, as capital expenditure and operational expenditure. Though this must include other expenses, they may have a marginal effect on costs. Kuwait has the lowest cost of extraction of crude oil at $8.5 per barrel. Kuwait is also a close ally of Saudi Arabia.
On the other side, Iran has a cost of extraction that lies around $12.6, and Russia’s is around $17.3. This gives a higher profit margin for Saudi Arabia compared to its archrivals Russia and Iran if crude falls below $30 per barrel. Russia has around 6.1% of the world’s total crude oil reserve. The United Arab Emirates, another close ally of Saudi Arabia, has a cost of extraction of about $12.3 per barrel. The data have been compiled by Rystad Energy and published on November 2015. The chart above shows the reserves of OPEC[1. Organization of the Petroleum Exporting Countries] and non-OPEC countries.
Other top consumers
The United States (SPY) and China (FXI) are top crude oil consumers and account for 2.9% and 1.1%, respectively, of the world’s total proven crude oil reserves. Occidental Petroleum (OXY) is a US-based integrated energy company.
In the next part, we’ll talk about Saudi Arabia’s fiscal deficit and the strategy it’s implementing to stabilize.