Oil production has set records this year for maintaining constant output in falling oil prices, but due to the recent good news of low production in North America, the price has been able to sustain itself at U.S. $50. But there are others that are major oil producers too. Namely, Saudi Arabia and Russia, have shown a very high number in oil production and it will remain at an all-time high.
There is some relief as Saudi Arabia and Russia both announced a deal that would help stabilize the oil market and help with this problem over supply. The deal is said to keep the oil prices at a steady rate and keep the markets stable for quite some time.
Of course, this can all come tumbling down as another player enters the game. After Iran increased its production from 2000 to 4000 barrels per day, the country’s national oil production company stated that it will keep increasing the output. The company is going to take a huge step further and produce about 300,000 barrels a day, reaching pre-sanction targets within two or three months. Can this be devastating for the world oil producers?
Iran is one of many threats facing the market these days. The market remains unpredictable throughout the year and oil prices can prove better or worse by the day. The market faces most of the threat from the uncertainty in demand. Even if the production is kept at an all time high, if there are no buyers available, the prices will keep falling no matter what.
There is however a bright side too. If the demand somehow increases, the demand will still be met and keep the market stable as it has been. Even if oil prices drop to U.S $30 per barrel, most of the wells can remain profitable and can help maintain the price as the demand grows.
The oil business is something that is taken very seriously around the world. Oil companies tend to generate profitability and worst case scenario plans for every 5 year and a lifetime. Great planning has kept the market growing at a steady rate and will continue to do so with uneven production.
Recently Canada has approved three oil fields in Alberta which will add about 95,000 barrels of oil per day to the current output, so it’s not just Iran.
Investors have to be extra smart about where and when to invest. This is the perfect time when the rare buy “signal” is generated but it is so rare that it happened only about 24 times in the history of the world and the ones who were smart enough to recognize it, made tons of money.
Choosing to invest with companies that have a chance of growing even with decreasing oil prices is good play here. Go with companies that have done settling their disputes and are thinking of expanding their business. It’s risky business but that’s the most profitable kind.