Is Saudi Arabia losing the oil price war?
“It is becoming apparent that non-OPEC producers are not as responsive to low oil prices as had been thought, at least in the short-run. The main impact has been to cut back on developmental drilling of new oil wells, rather than slowing the flow of oil from existing wells. This requires more patience,” said a recent stability report by the Saudi Central Bank.
In short, Saudi Arabia’s policy of keeping production levels abnormally high and driving out U.S. shale producers simply hasn’t worked.
Even as U.S. shale hedges are about to expire, some of the imminent bankruptcies would not result in wells getting abandoned, it would only result in cheaper acquisitions of bankrupt companies by their much bigger competitors.
Once oil prices again rise to $60 per barrel levels, the bigger oil companies would naturally ramp up their production levels which would in turn increase U.S. crude oil production.
Read More: oilprice.com
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