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It will be interesting to see what the economic outcome is for the OPEC countries which rely heavily on oil for govt. financing. Sure they can ride this out for a while to bankrupt some of the smaller players, but companies like Exxon and Chevron can ride it out too. Eventually Saudi Arabia, Iran, etc. will be in big trouble, unless of course they are adjusting their govt. out flows to respond to this drastic drop in profits from their oil.
Low oil prices will lead to instability in those regions which will lead to higher oil prices. IMO. The oil giants can stop or reduce significantly all exploration costs and just pump the oil they have on hand, and instead buy up a bunch of the US shale producers for pennies on the dollar. Hopefully the dividend remains intact .
Low oil prices will lead to instability in those regions which will lead to higher oil prices. IMO. The oil giants can stop or reduce significantly all exploration costs and just pump the oil they have on hand, and instead buy up a bunch of the US shale producers for pennies on the dollar. Hopefully the dividend remains intact .
This is likely what I see happening if oil remains below $40 for any extended period of time. Most of the big oil players have significantly cut their CapEx and are only funding projects that are near completion. This is actually why Exxon is in the best position. They had essentially completed all of their long term CapEx projects right around when the downturn hit last year. Chevron still has a few that are planned for completion between 2016-2018.
Low oil prices will lead to instability in those regions which will lead to higher oil prices. IMO. The oil giants can stop or reduce significantly all exploration costs and just pump the oil they have on hand, and instead buy up a bunch of the US shale producers for pennies on the dollar. Hopefully the dividend remains intact .
A new Saudi government could do wonders for the world.
I believe they already have a new replacement in King Salman. The country is essentially ruled by a small goup of families (like the Mafia). They're essentially hat-and-glove with the US on foreign policy. They're burning through a lot of cash financing these insurgencies in the Near East and Africa with some relief since ISIS seems to be targeting the acquisition of oil fields.
Oil is probably due for a snapback. 20% below the 50-day moving average is extreme. The other day's big fall put the price at 3 standard deviations below the 20-day moving average.
this is an example of technology taking scarcity and turning it in to abundance .
Usually, it is the other way around. Technology exhausts every abundant resourse it touches. Technology exhausted "easy", high energy output oil, and it will exhaust horrendously energy wasteful oil sources such as tar sands etc. Air is the only abundant free resource that remained. Watch out for air technology peddlers, that is your warning sign.
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