Early in March, oil prices crashed as a result of OPEC+ deal failure and a price war between Russia and Saudi Arabia. Some experts believe that Russia’s oil-market war with Saudi Arabia is part of a strategic campaign to cripple US shale-oil production. But does the oil market crash have any real impact on the US? Analysts do not expect US oil output to decline immediately. The main reason that can cause a slowdown in the industry is the temporary shutdown of shale-oil wells. According to S&P Global Ratings, oil output in the US is unlikely to dip sharply right now, but it could decline next year. The US Energy Information Administration forecasts the oil production to rise by 960,000 barrels per day in 2020, down from previously expected 1.06 million barrels. "The market should experience a sharp decline in production from the US next year similar to what happened during the last downturn," S&P Global Ratings said. In addition, the agency has lowered its 2020 price estimates for Brent to $40 per barrel and for WTI to $35 per barrel. As for the Henry Hub natural gas price, it will drop to $2 per million British thermal units (Btu), according to S&P Global. In 2021, the prices are expected to be $50, $45 and $2.25/Btu respectively. The suspension of unprofitable drilling rigs is widely spread in the US oil industry, so domestic producers are unlikely to be hit by the current market turmoil. At the same time, analysts at S&P Global Ratings warned that some high-yield companies may face a serious downturn, in particular, " issuers without hedges, those who face upcoming maturities, and are somewhat squeezed on borrowing-base revolving credit facilities."
