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$100 never again; there's a new normal for oil

The crash in oil (CLF16.NYM) has rocked commodities markets as crude prices hover near the lowest level in seven years.

Fadel Gheit, managing director and senior analyst at Oppenheimer, told Yahoo Finance's Alexis Christoforous in the video above that $100-per-barrel oil is a thing of the past—$60 to $70 per barrel is the new normal.

“When I look at the spread going forward, it does not look good,” Gheit said. “It’s not likely that we’ll see a recovery soon.”

OPEC’s decision on Friday to forgo cuts in oil production in the face of a global supply glut has added to the downward pressure on crude, creating more uncertainty in global markets. 

“OPEC is at an impasse. It’s a divided group,” Gheit said. “Saudi Arabia has an agenda. They want to weaken Russia, Iran, and shale producers in the U.S.”

The massive boom of U.S. shale oil that has flooded the market has sent prices plummeting 65% over the past 18 months. OPEC did not anticipate the shale revolution and is now struggling to find a strategic response.

While Gheit warns of some downside risk to prices, he does not anticipate a major drop in the short term.

“Oil prices could fall lower in 2016,” Gheit said. “I’m talking $2 to $3 dollars per barrel. I don’t see it dropping below $30 per barrel.”

The decline in crude has had a big impact on major oil companies. Shares of ExxonMobil (XOM), ConocoPhillips (COP), and Chevron (CVX) have crashed as the pain from lower prices spreads.

“Producers have already seen a collapse in earnings, and we expect weakness to continue into next year,” Gheit said. “Most independent oil and gas producers in the U.S. are in the red. They’re losing money.”

But it’s not all bad news. A drop in crude means lower gas prices, so Americans are not digging as deep into their wallets at the pump.

“This is a big break for the taxpayer,” Gheit said. “The average American family will save between $700 to $800 per year as a result of a drop in oil prices.”