Oil prices dropped below $0 for the first time ever. That is a negative figure which is clearly not a good thing for the US oil holders.
The American oil industry faces a crisis talk and are likely to lose billions of dollars from this latest surge. The blame is on the COVID 19 but more blame on the fact that the oil market has never been prepared for the worse.
The demand for oil has dropped drastically and the world rapidly growing out of storage. The problem may also stern from the fact that Russia and Saudi Arabia flooded the world with excess supply leaving them with no remains to delay the surge.
That “double black swan” has caused oil prices to fall and this has cost the United States shale oil companies to more money than ever.
The latest of the crude oil trading between $20 – $30 a barrel is disastrous and it is a nightmare. Not withstanding the fact that many oil comprises also took on too much debt before the era of corona outbreak noted Artem Abramov who is the head of shale research at Rystad Energy. In truth, some of these companies may not survive this historic downturn.
What will cause them to file for bankruptcy? The fact that the crude oil barrels are selling at $20 is concrete objective for the reason of bankruptcy.
The icing on the cake for the enemies of the energy sector is that dirt-cheap crude could force a wave of oil bankruptcies. More than 500 bankruptcies among exploration and production companies by the end of 2021 should not surprise anyone with the knowledge of the oil market.