"Things become more complicated when you turn to Saudi Aramco and its production at, say, the supergiant Ghawar oilfield. Western experts say that Saudi production costs average $10-$20 a barrel, give or take a few dollars either way. Of course, there are no hard public numbers when it comes to most Saudi oil data, only estimates from industry experts.
But Saudi Aramco is only superficially comparable to Continental Resources. It is an arm of the Saudi government; the oil that it drills funds roughly 80% of the palace budget, which by extension covers Saudi education subsidies, low-priced energy, housing allowances and other benefits, not to mention lavish support for the lives and schemes of every royal family member. Here is how this works across the oil patch."
When you add all that up, Saudi Arabia’s production cost is at least $86 a barrel of oil, or double Continental’s at the low end. The social costs can’t really be considered separately from those of the actual oilfield, because they are the mechanism by which various regimes stay in power; one is inextricably linked to the other. Saudi Aramco—like its brothers across OPEC—must earn those break-evens or eventually risk a collapse.
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