Well obviously it is likely oil will remain lower for the next decade, however, that doesn't mean it will be as low as $50 as that is not even close to sustainable. Saudi Arabia can only keep supplying at these negative amounts for another 24 months before it bankrupts.
The aim of OPEC was to choke the US shale which has not worked. Consequently, the Saudi's misjudged the growing US shale threat.
If the next massive short on oil is sucessful and another large dip occurs - OPEC will agree to cut back production. They have no choice.
If oil stays around $50 a barrel, most countries in the region will run out of cash in four years or less - International Monetary Fund reported. That includes OPEC leader Saudi Arabia as well as Oman and Bahrain.
OPEC countries may hate each other i.e Sunni vs Shiite vs Salafist but it doesn't matter how much you hate each other when you are Bankrupt. The Saudi/ Iran/ Iraq attempt to starve out its competition hasn't worked - they know that! Now even they are stupid enough to continue attempts to starve each other and US shale. They are only starving themselves by their own overproduction. Members will cut in September after OPEC meetings they have no choice especially when a massive shorting is underway. And if all of this leads to middle east war - well guess what?oil goes up.
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I also heard some other post comments to i will respond to:
1) Yes
@cmonaussie AKK has destroyed a lot of shareholder equity but it's simply the nature of the oil industry - war isn't cheap!
2) AKK capital costs are very low. They currently only have 6 people employed and the CEO gets out on the well when he is not in the boardroom. Logically, corporate costs cannot be high at the moment and I believe price per barrel if kept low will define their success.
And sector Leads comments lack zero reflection so I am not spending too much effort replying. But hey sector if you want to wait until AKK has proven on a balance sheet it is doing $31 a barrel break even then by the time you wish to enter your opportunity to enter at a reasonable price will be over. Most normal people (not on the spectrum scale) use analysis and assumptions and take a futures approach. Once an assumption is proven and there is 0 risk your entry point is going to be too high.
