In mid-June, crude oil was trading at close to $108 per barrel, as measured by the West Texas Intermediate benchmark. By the time markets closed on Friday, it was just over $85 a barrel — a drop of more than 20 percent and the lowest level since 2012.
“If you’re getting $20 less per barrel of oil, that definitely impacts your cash flow,” says Patrick Jankowski, vice president of research for the Greater Houston Partnership, “and it’s going to impact the level of drilling you’ll be able to do in the coming months and even, somewhat, your ability to service debt. Some people may have to be just a little bit more conservative in their outlook for the coming few months and the coming year.”
The drop in oil prices comes as growth slows in Europe and China. That’s raising concerns about a drop in global demand, even as crude production continues to increase both in the U.S. and the OPEC nations.