Biggest Winners and Losers of International Oil Price CrashIsaac Arnsdorf
Oil prices around the world have fallen more than 38 percent since the year’s high in June.
Saudi Arabia flexed its muscle at November’s OPEC meeting by overruling other members, showing that it’s still the dominant producer. The desert kingdom needs oil at $83.60 a barrel to balance its budget, according to the International Monetary Fund, but it’s got $736 billion in reserves.
Apollo Global Management LLC, the New York buyout firm run by billionaire Leon Black, announced the sale of shale driller Athlon Energy Inc. on Sept. 29 -- before oil dropped 29 percent.
Pierre Andurand, the 37-year-old London hedge fund manager, piled up an 18 percent gain in November betting against oil.
China, the world’s second-biggest importer, is taking advantage of slumping prices to build up strategic stockpiles. Cheaper fuel could reverse China’s slowing economy and make it easier for the central bank to cut interest rates.
Ed Morse, Citigroup’s head of commodities research, said early and often that surging U.S. oil production would drive down prices. His prediction of $75 a barrel went further than other analysts. Now it seems quaint.
The losers include Russia, where the joke about Vladimir Putin’s age, the oil price and the ruble’s value against the dollar all hitting 63 next year has Russians laughing. Nervously.
Iran, already hamstrung by sanctions over its nuclear program, needs oil at $130.50 a barrel to balance its budget, the IMF estimates. The price was less than $70 a barrel yesterday.
Cheaper oil challenges the economics of developing Canada’s oil sands. Calgary-based TransCanada Corp. hopes to build the Keystone XL pipeline to bring that oil to the U.S. Gulf Coast. Some say the industry has already moved on.
Drilling in some regions of Texas, Oklahoma and North Dakota is unprofitable at current prices. Those hardest hit include independents like Halcon Resources Corp., Goodrich Petroleum Corp., both based in Houston, and Oklahoma City-based SandRidge Energy Inc.
Harold Hamm, one of fracking’s leading cheerleaders and the founder and chief executive officer of Oklahoma City-based Continental Resources Inc., has lost more than $12 billion in three months -- half his fortune, according to the Bloomberg Billionaires Index.
“Nobody’s going to go out there and drill areas, exploration areas and other areas, at a loss,” Hamm said.
(An earlier version corrected China’s status as an oil importer.)