Fears of global economic turmoil rise as oil trades at $47 barrel

Fears of global economic turmoil rise as oil trades at $47 barrel

A recent Goldman Sachs report indicated that the price of oil could drop to as low as $20 per barrel.

Oil prices remain catastrophically low for the oil industry as worries about the global economy rise — but is the Mideast planning to release even more oil into the market?

Low global fuel prices are causing big problems for a lot of countries that depend on the commodity, and now they’re trying to cover their shortfalls — but that could mean even more regional crude in the market, according to an Associated Press report. Oil prices currently stand at about $45 per barrel.

Many Gulf nations have plenty of funds in reserve, but not all of them. Iraq, for example, is embroiled in a battle against the Islamic State and is trying to find money for that.

Iran is emerging as a possible player in the global oil battle. Now that they have a nuclear deal in place, they could reenter the global oil market and start making repairs to its fields and increase its production.

As a result, analysts think that the price of oil is going to drop further, especially now that many in the industry believe that U.S. production could ramp up in order to keep the prices low. It would also be a challenge to OPEC’s immense power in the industry.

Although massive changes in oil prices are not uncommon in the history of the Mideast, now that the many of the Mideast countries have vast cash reserves, they are able to cushion this blow and diversify their own economies to protect themselves.

A shocking recent Goldman Sachs report indicates that things could get even worse for the oil industry, arguing that price could plummet far below $40 or even $30 all the way to $20. This will happen, the investment firm argues, if the massive supply continues to exist through the end of next year. This means we could see a return to $2 per gallon gas or even lower than that.

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