InvestorQ : Why is the US planning to flood the world market with oil as reported by the International Energy Agency?
vaishnavi mhatre made post

Why is the US planning to flood the world market with oil as reported by the International Energy Agency?

Answer
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diksha shah answered.
8 months ago


That is a new supply side problem that is pushing oil prices down. For the last five years, the upsurge in shale production has ensured that the US has become the swing producer of oil and is able to dictate terms better than the OPEC. US oil bankruptcies have been on the rise with over 208 bankruptcies in the last 5 years. US shale companies realize that they need to sell oil aggressively without impacting price too much. US shale cannot be sold below $45/bbl as it is unprofitable for them and cost of funding has gone up. That means; the US must sell oil aggressively to the world. The IEA now estimates that US shale output could cross 20 million bpd by the end of 2020 and that is also depressing oil prices. If this is true then it could spell disaster for global oil prices.