From today’s Wall Street Journal, http://www.wsj.com/articles/oil-price-poker-why-the-saudis-wont-fold-em-1454270904
“Unlike governments, there is no OPEC of shale to coordinate output or absorb losses. Instead, there are loans to service and shareholders to placate.
Shale output will keep shriveling at today’s prices as companies slash spending and many go bust. On top of that, tens of billions of dollars in deferred capital expenditure from private companies on conventional oil projects soon will begin to affect output.
Private oil companies’ pain can help balance the market, but that will take time. Russian overtures that include political and military concessions might break the logjam and persuade the Saudis to take the lead on production cuts.
For now, politics, if not economics, suggests the Saudis will remain all-in. That alone could keep a lid on an immediate oil-price recovery.”
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