Bloomberg reported that the United States is set to surpass Saudi Arabia as the world’s top oil producer, even if oil costs $60 a barrel, or $120. The country will see a boost in oil production due mostly to the oil companies’ use of shale formations to extract crude.
As quoted in the market news:
“Saudi Arabia can’t afford a decline of that magnitude after the government pledged an unprecedented $630 billion on social welfare and building projects. The kingdom, which uses Brent crude to help set export rates, couldn’t meet those commitments if prices fell 25 percent from the current $109 a barrel, according to Samuel Ciszuk, an oil consultant at KBC Energy Economics in Walton-on-Thames, England.
“U.S. shale oil producers can’t lose,” Leo Drollas, the chief economist at the London-based Centre for Global Energy Studies, which was founded by Saudi Arabia’s former oil minister, said in a Dec. 10 telephone interview. “The Saudis really need to balance their budget at about $95. For the U.S. producers, that is more than ample.”