Oil prices have plummeted. Is this a long term decline or just a temporary drop?
Goldman Sachs Spooked the Market by Dethroning OPEC and Declaring the US King
Oil prices have plummeted. Why? US shale-oil drillers.
Goldman Sachs stated, in an October 26 note, that US shale-oil drillers have “become so potent that they have supplanted OPEC as the reigning global powerhouse.” Similar news has come out from Citi, prompting traders to perform massive selloffs. Goldman estimates that crude will drop to $80-a-barrel in the second quarter of next year.
This price drop has caused a major shift in international oil-producing states. Goldman Sachs estimates that Kuwait can cover its state budget at $63-a-barrel. Conversely, Saudi Arabia needs $85-a-barrel; Russia requires $104; Iran, $139; and Venezuela was estimated at $117-$121-a-barrel.
Assuming that US shale-oil drillers don’t drop production, prices may drop even lower, causing major shakeups internationally.