Sunday, July 2, 2017

Oil price will eventually spike due to under investment in exploration


There will be an extremely painful oil supply shortfall sometime between 2018 and 2020. It will be highly disruptive to our over-leveraged global financial system, given how saddled it is with record debts and unfunded IOUs.

Due to a massive reduction in capital spending in the global oil business over 2014-2016 and continuing into 2017, the world will soon find less oil coming out of the ground beginning somewhere between 2018-2020.

Because oil is the lifeblood of today's economy, if there’s less oil to go around, price shocks are inevitable. It's very likely we'll see prices climb back over $100 per barrel. Possibly well over.

investment into new oil finds

New oil finds

Oil is a depleting asset. Every barrel pumped needs to be replaced with a newly discovered barrel. Due to the low prices for oil discoveries of new reserves has plunged. Eventually demand will run into supply and the world will see another price spike.

I think oil prices will have one more drop and then we will see a move higher in prices.

No comments:

Related Posts Plugin for WordPress, Blogger...