Never mind $35 a barrel in New York, world’s cheapest oil already at $22

As oil crashes through $35 a barrel in New York, some producers are already selling for much lower prices.

A mix of Mexican crudes is valued at less than $28, an 11-year low.

Iraq is offering its heaviest variety of oil to buyers in Asia for $25.

In western Canada, some producers are selling for less than $22 a barrel.

“More than one third of the global oil production is not economical at these prices,”said Ehsan Ul-Haq, senior consultant at KBC Advanced Technologies. “Canadian oil producers could have difficulty in covering their operational costs.”

Oil has slumped to the levels of the the global financial crisis of 2009, amid a global supply glut.

While the prices of West Texas Intermediate and Brent, which are benchmarks, hover in the $30s, they represent a category of crude — light and low in sulphur — that is more highly valued because it’s easier to refine.

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Some producers of thicker, blacker and more sulphurous varieties have suffered heavier losses and are living in the $20s.

A blend of Mexican crude plunged 73% in 18 months, to $27.74 on December 11, its lowest level since 2004.

Western Canada Select, which is heavy and sulphurous, has slumped 75% to $21.82, the least in seven years.

Other varieties, including Ecuador’s Oriente, Saudi Arabia’s Arab Heavy, and Iraq’s Basrah Heavy, were selling below $30.

Crudes of this type trade at a discount to lighter varieties, because, to process them, “refiners have to invest in upgrading facilities, such as coking plants, which are very expensive”, said KBC’s Ul-Haq.

“It’s really a dramatic situation that really cannot continue for a very long time for many producers,” said Torbjoern Kjus, an analyst at DNB ASA in Oslo.

Mexico’s government insulated itself from the oil slump after it hedged 212m barrels of planned exports for 2016. The nation’s 2015 oil hedge provided it with a bonus of $6.3bn (€5.72bn).

Not all oil-producing nations are as well-protected.

Opec member Venezuela’s national budget for next year assumes a price of $40, when its own crude is trading just above $30.