Already struggling with weak prices from oversupply, the pandemic is taking a heavy toll on the oil industry. The International Energy Agency (IEA) says the impact on investments in the oil industry will continue to be felt for years to come.
The ongoing coronavirus pandemic will end up having long-term impacts on the petroleum industry that could be felt for years to come. The IEA suggests that in 2020, so far, oil majors have made spending cuts averaging about 35 percent in response to the effects that the coronavirus pandemic is having on demand.
The IEA notes that this spending slump is just in upstream oil and gas, reports Oilprice.com. According to an update earlier this month in its World Energy Investment report, this is part of a wider trend of investment cuts in the energy industry.
Exxon Mobil = on Friday – reported a third-quarter loss of $680 million, along with revenues dropping to $46.2 billion, down from $65.05 billion during the same quarter last year.
“This is a business that’s made a billion dollars a quarter on average from 2011 to 2018 and it’s had a rough go,” said Peter McNally, global sector lead for industrials, materials and energy at Third Bridge, a research firm, .reports the Charlotte Observer.
As CTV News Canada notes, Exxon wasn’t the only oil company to report a loss on Friday. Chevron reported losses of $207 million after turning in a profit of $2.9 billion last year. It brought in $24 billion in revenues, down from $35 billion during the same period last year.
“It’s not going well,” McNally said. “You have to squint at some of the things to find things that are good.” And the third quarter was an improvement compared with the last when oil futures crashed below zero. Exxon and Chevron lost a combined $9 billion.
And speaking of the IEA’s forecast of pandemic impacts affecting the oil industry for years, the agency points out that there has already been a 45 percent cut in investments by U.S. shale oil companies this year – combined with a 50 percent jump in financing costs.
When all is said and done – we come down to a keyword – uncertainty. As long as the coronavirus pandemic surges around the globe, and countries are again resorting to lockdowns, the petroleum sector will not be the only one to feel its effects, reports CTV News.