More job losses coming to US shale

WITH the recently concluded nuclear deal between Iran and the P5+1 countries, oil prices have already started heading downwards on sentiments that Iran's crude oil supply would further contribute to the already rising global supply glut. The economic crisis in Greece, Opec's high production levels and China's market turmoil have created more pressure on oil prices, making a price rebound look highly unlikely in the near future.

So, with the prices of both Brent and West Texas Intermediate moving towards US$50 per barrel, the short to medium-term outlook for oil remains mostly bearish. This is bad news for the US shale sector which is already dealing with rising debt and the ever-increasing risk of default.

A recent Bloomberg report stated that US drillers' debts stood at US$235 billion at the end of first quarter of 2015, which is quite worrying. Does this mean that the US oil sector is likely to witness a lot more lay-offs than we have seen so far? Surprisingly, a recent IHS study had revealed that the US shale sector has been boosting job creation in addition to supporting around 1.7 million jobs in US.