A few of the OPEC producers can profit with a very low price, as can a few of the frackers and other producers. The WTI price is now hardly over $59 a barrel. Few can profit with that. Most won’t even break even, if prices stay that low. And prices might go lower than that for some time. We’ll watch the show, as most players continue their bluffs and calls.
OPEC won’t lose so much, but Russia and Iran will.
This reads like something you got in the mail today to tout a subscription to a financial newsletter. Some could be true, but...
Oil can go to $10 and the cost to the Saudis per barrel is not affected. Someone posted a graphic of this. The Russians, on the other hand have huge costs as do the Venezuelans.
The Saudis— can limit their production and will to adjust to costs they have, even though their costs are the lowest of any oil source nation. Graphic was on another thread.
At bottom I am mystified as to how mankind assigns value to the material of God’s creation when it is harvested, formed, and marketed. I believe the answer resides in a piece of toast with an image of the Virgin Mary singed thereupon.
OPEC has never been confronted with such a system—in the 1980s, low oil prices put many competing suppliers out of business, and the industry took years to recover from the slump. By contrast, today’s wildcatters can go bankrupt and then restart very quickly when prices rebound. OPEC is not waging a price war against the United States—rather, U.S. producers are waging an insurgency against OPEC.
http://nationalinterest.org/feature/shale-oil-surprise-opec-faces-insurgency-not-price-war-11818
Many good links in the article.