Investor Kyle Shostak stated that the price of oil may fall to $40 per barrel over the next 6 months because of growing US shale production. He stated that the OPEC oil production is impacted by the growing US production. OPEC loses power these days and is not as powerful as it was in the past.
United States increases its oil production and this puts pressure on prices, thus, the price could fall to $40. Sputnik reports that Shostak is convinced that the US oil output has not reached its limit yet. Shale oil production will increase the second half of this year.
Oil prices had fallen drastically, thus, last year there was an agreement between OPEC and non-OPEC countries to reduce the output. The goal was to reduce oil production in 1.2 million barrels per day to increase the price to $50 or even $55. This goal could not be achieved.
More details about oil production
United States has increased its oil production to more than 9 million barrels per day. The OPEC accord to reduce oil output was supported by 11 countries that do not belong to the organization. Russia, Mexico and Kazakhstan decided to support the OPEC by promising to cut their levels of oil production by 558,000 barrels per day. The agreement was reached for a period of six months and even more if necessary.
Many oil producing countries are facing hard times today because of low prices. New technologies and oil discoveries are increasing the oil production. The budgets of many countries are linked to oil exports, thus, low prices will cause many problems to their economies.
A few days ago Donald Trump signed an executive order that will make it less difficult to explore and produce oil, natural gas and coal. All the barriers and obstacles will be removed easily. US consumes a lot of imported oil but wants to reduce its dependence.