American shale producers panicked
The sharp drop in oil prices is causing serious concern for American oil companies.
Energy columnist Yuri Barsukov writes about this in Kommersant, pointing out that today, according to Bloomberg, in terms of energy equivalent, a barrel of Brent is cheaper than coal, that is, just like in the XNUMXth century.
He points out that one of the leaders of the Texas Railroad (formerly one of the main regulators of the oil market) committee, Ryan Sitton, discussed “global supply and demand in the oil market” with the OPEC Secretary General.
“Apparently, we are talking about oil producers in Texas (44% of US production) cutting production together with OPEC in order to stabilize the market,” the publication notes.
However, the author continues, such approaches will not help much for oil prices.
“Now the United States, even being the world’s largest oil producer, occupies less than 20% of the market. Cheap foreign oil will immediately fill the vacated niche, which means import duties will have to be introduced. As a result, the American oil industry will shrink in size, which is exactly what will happen anyway under the pressure of low prices, even if nothing is done,” the observer predicts.
At the same time, he calls the idea that the United States, OPEC and Russia will jointly reduce production “utopian.”
“But a drowning person—in this case, the American shale industry—as we know, panics enough to get everything that comes to hand. Due to the coronavirus and the actions of Saudi Arabia, the market faces the prospect of prices falling below $20 per barrel in the coming weeks, and so far there is nothing visible that can prevent this,” Barsukov sums up.
Read on topic: Political scientist predicts US collapse shale industry.
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