Top shale oil producers in the United States have reversed their longstanding assertion that oil prices must be $70 a barrel before they’re willing to drill for more. According to Reuters, oil companies, including Rival Whiting Petroleum Corp and Continental Resources Inc, have adjusted the benchmark from $70 to $40.
A battle-scarred, but determined domestic oil industry
Despite the global downturn in oil production—the worst in nearly four decades—many view news that “$40 is the new $70” as a positive sign for the U.S. oil sector. The low cost of oil has forced producers to be more efficient and has ramped up competition among those who've managed to survive the slump.
The heightened efficiency and competition among U.S. shale oil companies doesn’t only impact the producers themselves but also the many industries that support oil production. If indeed the oil sector rebounds, businesses and manufacturers that rely heavily on domestic oil production are poised to gain as well.
Producers look beyond U.S. borders
The transformation of the U.S. oil sector during the downturn has inspired producers to compete globally. They view global growth as both newly feasible and necessary to remain competitive.
While shale oil in the U.S. was once viewed by OPEC as relatively insignificant, high-cost and isolated within U.S. borders, the country’s shifting business model has forced global oil giants to consider U.S. producers as legitimate rivals.