The world's largest oil and gas companies have cut jobs, spending and investment at their fastest pace since the coronavirus pandemic due to forecasts of a prolonged decline in oil prices, the Financial Times (FT) reported, citing analysts.
Fossil fuel prices have fallen by half since their peak after the start of the war in Ukraine in 2022, the publication reported, emphasizing that “price pressure“ will increase due to the recent decision by OPEC+ to continue increasing oil production. According to forecasts by consulting firm Wood Mackenzie, the price of benchmark Brent crude oil will fall below $60 per barrel in early 2026 and could remain there “for several years“ unless a “geopolitical shock“ occurs. Brent is currently trading at just over $66 per barrel.
At a price below $60, none of the major Western oil companies will be able to fulfill their investment plans or pay the dividends that investors expect. According to Wood Mackenzie, capital spending on global oil and gas production will fall by 4.3% this year to $341.9 billion, which would be the first such annual decline in investment since 2020.
As the US Energy Information Administration (EIA) previously said, a slowdown in capital investment growth in America will lead to a decline in production in the world's largest oil producer for the first time since 2021.