INSIGHTFUL ARTICLE BY DELOITTE: What has caused the sudden fall in oil price? What effect will this have
on the industry? Who will be the winners and who will be the losers? This article by Deloitte examines the impact plummeting crude oil price will have on company finances.
Here are some excerpts:
The collapse of crude oil prices in the second half of 2014 caught many
by surprise. The price of Brent crude fell more than 50 per cent from
$115 per barrel (bbl) in June to below $50/bbl by early January in 2015
and shows no sign of reaching the bottom just yet.
The last fall of this magnitude was during the financial crisis: in July
2008 prices were approaching $150/bbl, but had plummeted to below
$50/bbl by the end of the year.
Why has this happened? Because supply growth…
Can shale survive in a lower-price environment?...
The impact of falling oil prices on oil company finances
The oil price collapse has given rise to a high level of uncertainty,
which is being reflected in company balance sheets. After years of
relative price stability, investor confidence in the oil and gas sector
has plummeted, and for the moment there is little reason for confidence
to return. The question most asked in the industry is whether this is
ultimately a long-term downward structural adjustment in the price of
oil or a short-term temporary correction. A number of recent analyst
forecasts confidently point to a recovery back up to $80/bbl by the end
of 2017. Whether they are right or wrong, the continuing uncertainty
means that 2015 certainly looks like being a hugely challenging year for
oil companies, oil producing countries and global policymakers.
Read the full article here:
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