All good points, but surely all that “excess” oil isn’t sitting in huge tanks somewhere, is it?
What excess oil? The market demand fluctuates as well. It isn’t piling up.
If you have evidence of that, please put it out there. It is far more likely that there will be production cuts (leaving the oil in the ground as a proven reserve) than post-extraction storage (meaning you have to pay the cost of extraction and then storage and the asset generates no cash for you the entire time).
You have too many oil-producing countries that need both high oil production figures and high oil prices to keep their national budgets intact. In this hemisphere, Venezuela will implode sooner rather than later. Then they’ll hit up Chevron to modernize Maracaibo, and Chevron will, then the Venezuelans will nationalize the upgraded facilities and we can start that whole dance all over again.
Add Russia and Nigeria to the mix.
The only countries that can afford a low oil price are the Saudis, the Emirates and Kuwait. In the US, Dallas banks will stop lending on fracking projects at 70 USD/bbl. At 60 USD/bbl the TX economy starts to take a hit. Just in time for Rick Perry to make a decision on a presidential run.
It probably will.
Start looking for the old single hull tankers to be used as floating storage tanks.