Oil prices have slumped by 5% after the latest attempt by Saudi Arabia to kill off the threat from the US shale industry sent crude to its lowest level since the depths of the global recession almost seven years ago.
Signs of disarray in the Opec oil cartel prompted fears of a global glut of oil, wiping $2 off the price of a barrel of crude on Monday and leading to speculation that energy costs could continue tumbling over the coming weeks.
Shares in energy companies lost ground as the impact of the drop in oil prices rippled through European stock markets. Prices of other commodities also weakened following disappointment among traders that Opec had decided late last week to keep flooding the global market with cheap oil.
Saudi Arabia needs oil prices of $100 a barrel to balance its budget, but as the world’s biggest exporter of crude, it is gambling that the low price will knock out the threat posed by so-called "unconventional" supplies, such as US shale.
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4 comments:
These knuckleheads do not realize all that will do is delay the inevitable. This will not kill the industry just hibernate it We should suck all there oil dry for $50 a barrel then in 50 years sell our shale back to them for $90. All this strategy does is punt the ball down the field a little longer just like our national debt.
Just remember that PRIVATE INDUSTRIES are responsible for the shale oil revolution and innovation......NOT the Government.
1:09 has it figured out. Let them sell their oil for $40 a barrel. We will continue to buy it and build even more oil farms to store it. Mega oil storage farms. This woill slowly dwindle their money reserves too. The people of their country will revolt due to teh king's inability to give free stuff. They will be in turmoil. Sooner or later, their oil will come to a crashing end. When oil prices rise to the point where fracking and shale oil becomes economically viable again, the companies will start producing again. This is not brain surgery, it is common sense. American capitalism will work again. It's only a matter of time.
Good point above posted that shale technology was brought by private industry, not the government. To add to that point, we'd also still be paying upward of over $3 per gallon if it was still up to the government and Mr. O Malley, who can't stop taxing to pay for their stupid pork spending.
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