Some of the most respected investors around are sounding dire warnings on the implications of low oil prices for the energy industry.
The price of oil hit new lows last week, sinking to levels not seen since early 2009 during the financial crisis. And Wall Street thinks there is further downside risk with OPEC maintaining production and storage capacity reaching constraints.
“We reiterate our concern that ‘financial stress’ may prove too little too late to prevent the market from having to clear through ‘operational stress’ with prices near cash costs to force production cuts, likely around $20/barrel,” Goldman Sachs’ Damien Courvalin wrote in a note to clients Thursday.
Billionaire investors Leon Cooperman and John Arnold recently told CNBC if oil prices stay low, there will be drastic consequences.