For the last five years, U.S. shale oil producers have been battling suppliers for lower costs and running equipment and crews hard to drive drilling costs down by about $20 a barrel.
The oil market rout last week, however, has left most shale firms facing prices below their costs of production. The Organization of the Petroleum Exporting Countries (OPEC) and major oil producers including Russia have turned on each other to launch a price war that threatens to sink shale companies burdened with higher costs.
The cause of OPEC and Russia’s disagreement was what to do about plummeting oil demand as coronavirus curbs travel and economic activity worldwide. When oil producers failed to agree on coordinated cuts, they abandoned all attempts to keep global markets balanced.
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