The situation regarding the cost of oil and its impact on world economies there is depending on who you speak to. Economists seem to be cautious, claiming that new oil fields predicted to begin production in the next two years could exacerbate an already overflowing supply. Johann Kern says;
“2017 may well see a continuation of the current situation in the oil markets with supply outstripping demand. Due to the nature off field exploration and the placement of drilling rigs, plans are already well underway the opening of new fields and rigs during the year. While it is possible to mothball some of these, the emerging economies of the Far East are keen to put their hats in the ring and exploit then you found oil wealth with the minimum of delay.
Using established and cost-effective research and reading techniques as well as a markedly lower cost for labor, it is likely that this new influx of oil resource will prove profitable for its owners, even if it forces the already low cost of oil down even further during the next 18 months or so.
However, the other side of the coin is optimism within the industry itself. Recent predictions are that the United States or industry is gearing up for one of its largest expansions in recent years as reported on Bloomberg and CNN a few weeks ago.
Saudi Energy Minister Khalid al-Falih as stated openly that he is willing to reduce output in the medium term to boost the value of crude oil.
Which of these will prove to be the correct prediction?
We will have to wait and see.