Hedge funds and private equity groups armed with US$60 billion ($92 billion) of ready cash are poised to snap up the assets of bankrupt US shale drillers, almost guaranteeing that America's tight oil production will rebound as soon as prices start to recover.
Daniel Yergin, founder of IHS Cambridge Energy Research Associates, said it was impossible for the Organisation of Petroleum Exporting Countries (Opec) to knock out the US shale industry though a war of attrition, even if large numbers of frackers fall by the wayside in coming months.
Yergin said groups with deep pockets such as Blackstone and Carlyle would take over the infrastructure when the distressed assets became cheap enough, and bide their time until the oil-price cycle turned.
"The management may change and the companies may change, but the resources will still be there," he told the Daily Telegraph.
"It takes US$10 billion and five to 10 years to launch a deep-water project. It takes US$10 million and just 20 days to drill for shale," he said, speaking at the World Economic Forum in Davos. In the meantime, the oil slump was pushing a string of exporting countries into deep social and economic crises.
"Venezuela is beyond the precipice. It is completely broke," said Yergin.
Iraq's Prime Minister, Haider al-Abadi, said in Davos that his country was selling its crude for US$22 a barrel, and half of this covered production costs.
"It's impossible to run the country, to be honest, to sustain the military, to sustain jobs, to sustain the economy," he said.
It is understood that KKR, Warburg Pincus, and Apollo are all waiting on the sidelines, looking for worthwhile US shale targets. Major oil companies such as ExxonMobil have vast sums in reserve, and even Saudi Arabia's chemical giant SABIC is already nibbling at US shale assets through joint ventures.
Yergin is the author of The Prize: The Epic Quest for Oil, Money and Power, and is widely regarded as the guru of energy analysis.
He said shale companies had put up a much tougher fight than expected and were only now succumbing to the violence of the oil price crash, 15 months after Saudi Arabia and the Gulf states began to flood the global market to flush out rivals.
"Shale has proven much more resilient than people thought. They imagined that if prices fell below US$70 a barrel, these drillers would go out of business. They didn't realise that shale is mid-cost, and not high cost," he told the Daily Telegraph.
Right now, however, US frackers are in the eye of the storm. Some 45 listed shale companies are already insolvent or in talks with creditors.
The fate of many more will be decided in coming months when about 300,000 barrels a day of extra Iranian crude hit an already saturated market.
The buccaneering growth of the shale industry was driven by cheap and abundant credit.
The guillotine came down even before the US Federal Reserve raised interest rates in December, leaving frackers struggling to roll over loans. Many shale bonds are trading at distress level below 50c on the dollar.
Banks are being careful not to push them into receivership but they themselves are under pressure. Regulators fear that the energy industry may be the next financial bomb to blow up on a systemic scale.
The Fed and the US Federal Deposit Insurance Corporation have threatened to impose tougher rules on leverage and asset coverage for loans to fossil-fuel companies.
Yet even if scores of US drillers go bust, the industry will live on, and a quantum leap in technology has changed the cost structure irreversibly.
"US$60 is the new US$90. If the price of oil returns to a range between US$50 and US$60, this will bring back a lot of production. The Permian Basin in West Texas may be the second-biggest field in the world after Ghawar in Saudi Arabia," said Yergin.
Zhu Min, the deputy director of the International Monetary Fund, said US shale had entirely changed the balance of power in the global oil market and there was little Opec could do.
"Shale has become the swing producer. Opec has clearly lost its monopoly power and can only set a bottom for prices.
"As soon as the price rises, shale will come back on and push it down again," he said.
The question is whether even US shale can ever be big enough to compensate for coming shortage of oil as global investment collapses.
"There has been a US$1.8 trillion reduction in spending planned for 2015 to 2020 compared to what was expected in 2014," said Yergin.
Yet oil demand is still growing briskly. The world economy will need seven million more barrels a day by 2020. Natural depletion on existing fields implies a loss of a further 13 million barrels a day by then.
Adding to the witches' brew, global spare capacity is at wafer-thin levels - perhaps as low as 1.5 million barrels a day - as the Saudis, Russians and others produce at full tilt.
Yergin said those hoping for a quick rescue from Opec were likely to be disappointed.
Market watchers remain cautious after oil rallies
Oil fluctuated near US$32 a barrel after the biggest two-day rally in more than seven years.
Futures slid as much as 0.8 per cent and gained as much as 1.4 per cent in New York. Front-month prices capped a 21 per cent advance over two sessions at the close last week after the February contract expired at US$26.55 a barrel, the lowest since 2003.
Hedge funds reduced record bets on falling prices ahead of the rally, data from the US Commodity Futures Trading Commission show.
"Once the buying started, it became a scramble," Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. "The long-term downtrend remains in place and until we crack that, the market has to remain cautious."
Oil is still down about 13 per cent this year as volatility in global markets adds to concern over brimming US stockpiles and the prospect of additional Iranian exports.
Prices might take as long as three years to normalise and a speedy rebound was unlikely, Bank of Montreal chief executive William Downe said in an interview in Davos, Switzerland last week.