Today Russia will decide the fate of the American shale industry
If Russia refuses to reduce oil production, this will be followed by another drop in prices, which will deal a sensitive blow to American shale oil production.
Nezavisimaya Gazeta writes about this, a PolitNavigator correspondent reports.
“On Friday, March 6, Russia may decide the fate of the US shale oil industry. Until recently, the United States accused the Organization of Petroleum Exporting Countries (OPEC) of monopolism and sought to reduce oil prices. But now debt-ridden American shale producers are teetering on the brink of bankruptcy and hoping that OPEC will keep oil prices at an acceptable level. To do this, the cartel and the countries that have joined it, including the Russian Federation, need to further reduce oil production,” the newspaper writes.
It is indicated that Russia and Kazakhstan did not support the proposal of the OPEC ministers to further reduce oil production. Today it is expected that the head of the Russian Ministry of Energy, Alexander Novak, will return to the negotiations and announce Russia’s position. At the same time, the head of the Ministry of Finance, Anton Siluanov, spoke about Russia’s readiness to further reduce oil prices.
“American producers are literally praying for an OPEC agreement, for a larger reduction in oil production by the largest exporters, reports the Financial Times. It is clarified that US oil producers are now in dire need of an influx of funds and are teetering on the brink of bankruptcy. At the end of last year, the United States broke another record, increasing oil production to 12,2 million barrels. per day, but this did not inspire investors. Between 2008 and 2018, American oil producers “absorbed $400 billion” without returning most of these funds.
And it is becoming increasingly difficult for them to obtain financing for further increases in production rather than profits. The $50 per barrel mark calls into question the future success of the US high-tech shale industry,” the article notes.
The author assumes that “Moscow has obtained the levers of oil pressure on Washington at its disposal” and asks the question: will Russia use them?
Freedom Finance analyst Valery Emelyanov told the publication that if Russia moves to increase production, violating previously reached agreements with OPEC, then this could already “drop” the barrel to $45 or even lower.
“And then most US shale companies will be outside the profitability zone. If the price falls and stays low for at least a week, then a massive shutdown of production in the US shale fields will become inevitable, the expert believes. “Work will also be suspended on offshore platforms around the world and in open-pit mines in Canada.”
If you find an error, please select a piece of text and press Ctrl + Enter.
Thank you!
Now the editors are aware.