US banks appear to be gearing up for entry into the oil industry

Oil industry

The oil industry is estimated to owe banks $ 200 billion in loans.

(Photo: AP)

new York According to insiders, some major US banks are preparing to start operating oil and gas fields in the country for the first time in decades due to the slump in oil prices. Losses caused by the bankruptcy of energy companies with high bank debts should be avoided, Reuters learned from several insiders.

JPMorgan Chase, Wells Fargo, Bank of America and Citigroup are each in the process of establishing independent companies that could take over the oil and gas fields. The banks were also looking for experienced managers to run the company. The money houses initially did not comment on this.

The oil industry is estimated to owe banks $ 200 billion in loans backed by oil and gas reserves. The demand for oil had plummeted due to the corona virus pandemic, and at the same time there was a massive oversupply in the market due to a dispute between the oil exporting countries.

According to experts, the US shale oil producers need an oil price of around $ 50 a barrel (159 liters) to work profitably. The US oil grade WTI currently only costs about $ 23. The first shale oil companies have already applied for bankruptcy protection.

In early March, the fall in prices was triggered by Russia’s refusal to further cut production volumes due to the coronavirus crisis. Restrictions to contain the pandemic have reduced global crude oil demand by around a third or 30 million barrels a day within a few weeks.

More: Saudi Arabia and Russia agree on oil price war.

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