The global economic downturn will end, but not all American oil producers will be able to survive it.
This was reported by The Hill.
According to media reports, now only luck can save the US shale industry, which suffered the most catastrophic blow due to a collapse in oil prices. The publication compares the situation with Armageddon, given that, following the cost of raw materials, shares of mining companies also collapsed, up to 50 percent.
At first glance, it seems that the coronavirus epidemic and Russia’s decision not to reduce oil production became a sentence for the American shale industry. However, the threat loomed over this segment for a long time. Thus, oil prices methodically decreased “due to excess supply and a slowdown in global economic growth”. A significant role was also played by the growing popularity of alternative energy sources. However, as the author of the article notes, Saudi Arabia dealt a decisive blow to the American shale, deciding to “drown” the world in its own cheap oil.
Thus, Riyadh once again tried to oust the United States from the global energy market, the publication explains. This has already happened in 2014. Then the campaign failed, and the author hopes that the Saudis will again fail.
For this, the American oil industry must be stretched to gain victory over the coronavirus. Moreover, the US Energy Information Administration predicts a 50% increase in global energy consumption over the next thirty years. However, even with such encouraging prospects, the US shale sector will have to survive the catastrophe that will entail massive layoffs and a reduction in tax revenues to the US budget.