In this file photo taken on September 6, 2016 shows pump jacks and a gas flare near Williston, North Dakota.
/ AFP / Robyn BECK
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The recent nosedive in crude prices came just as shale producers had started delivering healthy returns after years of heavy spending to boost production and market share.The 29 percent drop in U.S. oil prices since October threatens those improved margins, and sustained prices below $50 could dent the value of shale reserves, which banks use to determine borrowing power.Activity in the largest U.S. oil field could fall 10 to 20 percent next year if prices stay down, said Steven Pruett, chief executive of shale producer Elevation Resources LLC. Since the 2014-16 price war between OPEC and shale producers, when soaring global supply pushed per-barrel prices down into the $20s, west Texas shale drillers have learned to wring profits at prices as low as $38 a barrel, down from about $71 in 2014, according to consultancy Rystad Energy.Middle East producers' costs are about $11 a barrel in Iraq, less than $17 in Saudi Arabia, and less than $21 in Kuwait, according to Rystad.These countries, however, need much higher prices to finance their state spending.
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