West Texas is fast becoming OPEC’s worst nightmare when it comes to oil output on a global scale.
The oil cartel is meeting next week to decide whether or not to continue cutting back production in preparation of Texas pipelines being completed in the coming months.
“That will be strategically placed between Corpus Christi and the Houston Ship Channel to deliver the crude coming out of the Permian Basin,”says Kym Bolado, host of “In the Oil Patch” radio show.
“The flood gates will open in mid-2019 and for sure in 2020,” she says. “The market is going to be just full, then they're going to have to figure out how many times do they cut to keep prices high enough for them to make a profit.”
The biggest difference she says, is U.S. producers can still make a profit when prices are $30-40 lower than OPEC's threshold. That means OPEC nations are essentially at the mercy of Texas when it comes to dictating crude prices.
“They lost $150 billion when they decided to flood the market the last time,” says Bolado. “That would probably be the last thing they would want to do is drop these prices, but then again everybody has a breaking point.”