Oil Prices Plunge By 24% – What Does That Mean For US?

Russians and the Saudis could not agree on output cuts for the oil markets so they decided to kill the US oil exploration companies.

Oil dropped 30% over the weekend to $31 a barrel. Projections are it could hit $20 a barrel – adjusted for inflation it could be even free.

The market is set to drop another 1000 points tomorrow. Saudi Arabia can pump as much oil as they can to make their revenue target at lower prices – they need the money.

The US shale producers with a higher cost of production will be severely hurt by these low prices. We may be looking at many bankruptcies in the oil sector, some with huge debt loads.

Unless these prices recover quickly, there could be massive layoffs in the Permian basin. The oil majors have the cash and balance sheets to withstand a downturn but that is not the case with the fracking companies.