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Price of Brent crude oil has fallen by 54%


18 March 2020

According to Politico, 13 Republican senators addressed a letter to Crown Prince Mohammed bin Salman.

“Your Royal Highness,” - they write. “ - The United States has for many years been a strong and reliable partner of Saudi Arabia. In the light of this close strategic relationship, the kingdom’s plans to lower prices and increase production capacity were deeply worried. This led to the collapse of world oil prices in a situation when the financial markets of the world have already suffered serious losses. "

Since the beginning of 2020, the price of Brent crude oil has fallen by 54% to $ 30.5, that is, towards the levels of the end of 2015. High-cost shale oil production is becoming unprofitable.

Shales are forced to reduce production, up to the conservation of deposits. Upstream companies have significantly reduced costs in the hope of waiting for a period of low oil prices.

In order to get out of the depths of stagnation, American oil companies need quotes of their oil at about $ 50 per barrel (according to Rystad Energy, only a few shale companies have a break-even level below current prices, and more than 95% receive losses). Even if a miracle happens and WTI prices stabilize at $ 40, it will still entail the collapse of the US oil industry.

#source

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