Yemisi Izuora
International oil companies are currently being threatened as oil price shows further weakness and companies are foreseeing sliding financial performance.
A recent renewed decline in the price of oil is gathering pace, with international benchmark Brent crude hurtling towards the $50 a barrel threshold it last breached in January.
Reports indicated that in London the price per barrel was hovered a little above $51 on Monday, after it shed close to 2.3 per cent following a similar fall in New York.
It is now more than 25 per cent below the peak of its spring recovery in May and is firmly entrenched in bear market territory, with many predicting a continued slide.
The Wall Street Journal (WSJ) said the latest selloff followed another round of data showing a persistent supply glut, with US producers continuing to increase output and, crucially, a significant decline in manufacturing activity in China.
The country is the second-largest consumer of oil in the world and the news is damaging to the outlook for demand, which needs to remain sky high to justify excess production from Opec countries and the US shale industry amid a bitter turf war.
The falls come on the back of a painful week for oil exploration majors, with the likes of BP, Shell, ExxonMobil and Chevron reporting substantial declines in profit and the withdrawal of billions of dollars’ worth of projects as the industry braces for prices to remain low.
Michele Della Vigna, co-head of European equity research at Goldman Sachs, has told CNBC that by 2020 it sees oil remaining around $50 per barrel, well below current projections of prices recovering to around $70 and a worrying sign for big oil companies.
However, the World Bank recently said it still expects the price to recover this year and be above $70 by 2020.