American Shale business was the fastest growing industry in America and now is slowing down faster than it grew. Shale companies are going out of business. They drilled shale while prices were low hoping oil prices would eventually rebound. Many companies are seeing the writing on the wall as banks are closing their doors to shale. Many shale companies are hoping for a miracle.
China’s hunger for oil has risen 30% and their oil production has dropped 15% as they don’t have the reserves OPEC, Russia, and America has. Their hunger for growth is far greater than their road block for energy.
Saudi Arabia is desperate and willing to do what ever it takes to raise oil prices but at what cost? I can see 1 of 3 things happening. 1 )They can wait it out as they know Shale can not maintain this artificial smoke screen of 10MM BOPD as shale is unstable. 2 ) They can increase the glut of oil by turning on their oil spigots 100% until shale breaks it’s back. 3 ) They will continue to reduce oil output by making cuts. Saudi’s are stuck between a rock and a hard place. They have a 2 trillion dollar Aramco IPO that can’t be taken seriously until we have peace in the middle east and oil prices hit $80+. The chances of both of these happening are slim to none. It is more likely to see oil prices remain $60+ until shale falls or something catastrophic happens in the middle east.
China is the catalyst as their thirst for energy is greater than America during the Bush Admin and they have 4X the population. America’s addiction to oil caused oil prices to hit record highs in 2008.
60% of Russia’s GDP is oil and Vladimir Putin will do what ever it takes to go down as the greatest leader Russia’s ever had even at the expense of being an evil dictator in the middle east.
Desperation for oil prices to rise creates an unstable middle east. Saudi’s, Russian’s, Iranians, Kuwaitis, Syrians etc… ARE DESPERATE AND WILLING TO DO ANYTHING TO INCREASE OIL PRICES AS IT’S THEIR ONLY HOPE!
It’s going to get messy!
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