Originally Posted by
Big E 757
Don’t you think the U.S oil/fracking industry will help keep oil below $100 though. I was reading about the new realities of oil prices a year or so ago. It costs Saudi Arabia around $15 to pull a barrel of oil out of the ground and it costs the US frackers about $60-65. The theory was that when oil prices exceeded $65 a barrel, all the US rigs would spool up again and bring more oil to market and reduce the severity of price shocks. I’m not too worried about $100 oil, except for a possible short term move, based on geopolitical fear.
At the moment there is a bottleneck in distribution for oil coming from fracking regions. For example, there are not enough pipelines coming from the Permian Basin in Texas to take all that is or could be produced.
Also, the US said they would impose sanctions on anyone taking Iranian oil. That’s about 5M barrels a day.
http://money.cnn.com/2018/05/08/inve...sin/index.html
Plus there has been underinvestment in production oveall.
https://www.bloomberg.com/news/artic...sh-over-growth