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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: GlobalMarine who wrote (14270)3/9/1998 11:22:00 PM
From: Tulvio Durand  Read Replies (1) of 95453
 
I agree that if oil prices were to stay low for six months or more then E&P budgets could start feeling the heat. But none, as far as I know, has predicted that oil will remain cheap for very long. I expect the following scenario: Saudi Arabia will let oil prices fall until other OPEC members (Venezuela, Qatar, et al) start feeling the heat. At some point oil revenues will fall to the point that the shortfall cannot be made up by increased oil production. It is the game of "chicken" that's being played out, and it will not last more than a few weeks because none of the players can stand for long the loss of income from cheap oil. When all OPEC members become properly motivated, Saudi Arabia will pull the plug on oil production. And other OPEC countries will take turns in reducing production. I agree that caution is advisable. But I remain convinced that today's cheap oil will soon be a memory. Regards, Tulvio
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