When Saudi Arabia cuts oil prices it does so because it wants to protect market share. We have seen the price of oil move back and forth a lot in 2015. As we entered the year the price of oil as quickly moving down from over $100/barrel in 2014. That decline has continued through most of 2015. We saw a slight bump back to $60/barrel but that rally was short lived.
At this point when Saudi Arabia cuts Oil Prices they are saving market share. They do not wish to see lower oil prices affect where other countries purchase oil. Their goal is to make sure that large purchasers are still picking up their oil. Saudi Arabia is still a large part of the oil and gas market.
Domestic Changes
Back in the United States when Saudi Arabia cuts Oil Prices is doesn’t have a huge affect. Most of our oil is used locally so we aren’t exporting our oil to other counties. However, it’s still a good idea to keep an eye on what the price of oil is doing in the market. You can expect to see the price continue to move through 2015 and 2016. As prices eventually settle down we will probably end up in a $60-$75 range according to many analysts.
Mineral Owner Impact
When Saudi Arabia cuts Oil Prices is doesn’t have a large impact on mineral owners. However, the overall price of oil does matter. The price of oil directly affects your royalty checks. As oil prices go down you will see a large decline in monthly royalty checks. This can definitely hit the pocket book and make things a little tighter!
If you are thinking about selling mineral rights in the Marcellus Shale now is a good time to do so. There is still a lot of demand for mineral rights. There are many mineral rights buyers who still want to participate in the market.
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