A price war between the world’s oil powerhouses is leaving many producers in Latin American struggling to cover production costs, boosting chances of output cuts and investment delays in coming months.
Global oil price benchmarks have had their steepest declines in decades in a perfect storm of falling demand during the coronavirus epidemic and surging supplies after Russia and Saudi Arabia failed to reach a deal to extend output cuts.
“Latin America’s flowing production is over 7 million barrels per day. At current prices, we estimate that half is non-economic, taking into account all costs, including transportation and taxes,” said Ruaraidh Montgomery from oil research firm Welligence.
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