I don’t think oil price is one of those thing you’d leave to the free-market, supply/demand stuff. It’s too valuable, and too powerful, for that kind of nonsense.
So its price is determined on some sort of grand strategy – both in the fight for market share, for control over supply, for reserves, to get rid of potential competitive sources (wind, solar etc.)… and for geo-political purposes.
So in the short to medium term, the chess players get to muck around with the prices. That play time is almost over… so they will soon either go broke or reduce supplies to start making money or else the entire industry will go broke and be replaced with alternatives.
For one thing, the oil service providers are either broke or very close to it over the past 3 to 4 years. Keep that up any longer and the oilers will see a mass merger among them that will soon enough clobber them. So they got to starve but not completely kill their subcontractors.
Can’t pay your subbie adequate returns if you yourself can’t make crazy profit.
Can’t make crazy profit supplies are all over the place.
The past few years have seen, I think, enough small wildcatters getting skinned. They have either sold out on the cheap, giving up their reserves… or gone broke. The great sweating is about done.
So those with deep pockets, or with friends and gov’t with deep pockets… would have taken out rivals and small timers. They would also have taken out the funders of alternatives… or made themselves into white knights that future innovation will be at their control, and also to their benefit.
It should be feast time soon.
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