Oil Can Fall All The Way To $30 If The Price War Becomes Unmanageable

Crude oil prices has taken a free fall. In the last few months, crude oil price has tumbled from a peak of $115 per barrel to $65 per barrel. Market analysts are now predicting that the price can fall to $40 per barrel if the price war initiated by the OPEC countries spirals out of control.

“There is a possibility that if this price war becomes unmanageable, [we could] see prices down to about $40 a barrel [for WTI],” Jonathan Barratt, chief investment officer of Ayers Alliance Securities, told CNBC.

However one person is predicting that the price can fall to $30 per barrel. Canada’s oil industry faces a year of “tough slugging,” including the deferment of many projects, as oil prices collapse to as little as US$30 a barrel then likely stabilize around US$70 to US$75 a barrel, oil entrepreneur Murray Edwards predicted Friday.

This collapse of the crude oil prices can usher in another global financial crisis. Oil’s decline is proving to be the worst since the collapse of the financial system in 2008 and threatening to have the same global impact of falling prices three decades ago that led to the Mexican debt crisis and the end of the Soviet Union. Oil producing countries that have been growing fat on high prices plus the big banks who has made huge loans to the shale oil companies are expected to suffer the most. It can be like th dotcom bubble that wreaked many early internet companies. The toughest internet companies survived the dotcom bubble and the same is being predicted by the market analysts to happen again. Tough shale oil companies will survive the price war and in the long term the price can stabilize around $70 per barrel.