Challenges lie ahead for oil industry in short run: American Petroleum Institute senior vice president
American Petroleum Institute Senior Vice President Frank Macchiarola discusses the sharp downturn in oil prices and the short-term impact it will have on American producers.
Some U.S. shale companies are fighting to survive after an oil price war between Saudi Arabia and Russia sent crude plunging.
Continue Reading Below
West Texas Intermediate crude oil, the U.S. benchmark, fell by as much as 33.8 percent, the most since the outbreak of the 1991 Persian Gulf War, to a low of $27.34 a barrel in overnight trading. Oil must be in the upper $40s on an aggregate basis to make U.S. shale companies be profitable.
“We were already looking at levels that were holding around your break-even line,” Stephen Schork, founder and editor of the daily oil subscription newsletter, “The Schork Report,” told FOX Business. “When you couple that with the fact that $140 billion dollars of debt is coming due over the next two years and Wall Street is not going to, in most cases, roll that debt forward, i.e. they want their money back. There was already going to be a tremendous amount of bloodletting in the oil patch.”
PUTIN TAKES AIM AT US SHALE OIL INDUSTRY
The last time crude oil prices fell into the mid-$20 per barrel range, in February 2016, crude rebounded to $48 per barrel within three months. However, the demand picture is weaker this time around as the outbreak of the new coronavirus has resulted in fewer flights and social distancing.