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Is Another Oil Price Spike Likely?

June 12, 2020

Via: Forbes

The crash in oil prices and collapse in drilling (especially in the U.S. shale sector) has caused many observers to warn that insufficient investment will lead to another supply shortfall and price spike. This is certainly possible but fears that insufficient upstream investment will lead to another price spike in the next few years are probably overblown. There are three factors raising concern: that shale oil has historically not been profitable and so will not attract capital in the future, that the oil price collapse will leave oil companies with a huge debt overhang, and that the upstream sector more generally tends to be subject to cycles of over- and under-investment, and the latter is now with us.

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