Even if global oil prices plunge below US$50 per barrel, Guyana’s oil sector will remain in the black. That is according to financial analyst Joel Bhagwandin, who says the country’s low breakeven cost offers strong insulation in volatile markets.
Speaking to Ignite News, Bhagwandin said while many global producers could face heavy losses if prices fall, Guyana is well-positioned to weather the storm.
“The average global breakeven price is about US$50. In some countries, the breakeven is US$60, while in others it ranges between US$30 to US$40. Our breakeven cost is less than US$30. If oil prices were to fall below US$50—say, below US$30—and remain between US$25 to US$30, more than 50 per cent of global oil producers would become unprofitable. That’s over 50 per cent of global crude oil producers. If, in the long run, oil prices drop to that level, these producers would no longer attract investment and would eventually go out of business. This means that, even amid climate change and the shift to renewable energy, countries like ours will still have a market to supply long into the future,” he said.
The analyst explained that if higher-cost producers exit the market, demand will create new space—and that is where Guyana can continue to thrive.
“If 50 per cent of all producers go out of business due to oil prices collapsing to US$30 or US$25, Guyana will be one of the few countries that can remain profitable—even if prices fall to as low as US$25—because of our low breakeven costs. So, in terms of long-term sustainability, the global impact will be two-fold: 50 per cent of countries will become unprofitable and unsustainable, which will create space and sustained demand for countries like ours to continue supplying the market,” he explained.
Currently, in the global market, there has been no drop in oil prices. In fact, the opposite has occurred due to escalating geopolitical tensions. Oil prices saw a sharp rise this week amid mounting unrest in the Middle East.
Brent crude jumped to US$75.35, up nearly three per cent, while the US West Texas Intermediate (WTI) rose to US$73.20. The surge follows fears of disruption in the vital Strait of Hormuz, linked to the ongoing Israel–Iran conflict, according to Reuters and The Times.
Though prices briefly dipped after news of a potential truce from Iran, crude remains nearly 17 per cent higher over the past month—but still about 10 per cent below last year’s highs.
Looking ahead, JP Morgan forecasts oil prices in 2025 to hover in the low to mid-60s. The bank warns that only a major supply shock would push prices to the US$120-to-US$130 range.