The Saudi-Russian Oil War is going to cause crude oil prices to collapse.
Saudi Arabia plans to increase oil output next month, going well above 10 million barrels a day, as the kingdom responds aggressively to the collapse of its OPEC+ alliance with Russia.
…“This is going to get nasty,” said Doug King, a hedge fund investor who co-founded the Merchant Commodity Fund. “OPEC+ is going to pump more, and the world is facing a demand shock. $30 oil is possible.”
Oil traders are looking to historical charts for an indication of how low prices could go. One potential target is $27.10 a barrel, reached in 2016 during the last price war. But some believe the market could go even lower.
“We’re likely to see the lowest oil prices of the last 20 years in the next quarter,” said Roger Diwan, an oil analyst at consultant IHS Markit Ltd. and a veteran OPEC watcher, implying that the price could fall below $20 a barrel. — Bloomberg
Lower prices will provide a bit of relief to the already battered industrial sector and a nice stimulus to U.S. consumers as the price of gasoline follows crude lower.
In 2019, about 142.23 billion gallons (or about 3.39 billion barrels1) of finished motor gasoline were consumed in the United States, an average of about 389.68 million gallons (or about 9.28 million barrels) per day. – EIA
For every $.25 drop in the price of gasoline, domestic consumers are set to save about $100 million per day. A nice tax cut.