Mar 24, 2020 - Energy & Environment

Chevron joins other majors making big cutbacks amid cratering oil demand

Chevron gas station

Photo: Justin Sullivan/Getty Images

Chevron this morning said it's slashing its planned 2020 capital spending by $4 billion — roughly 20% — and suspending share buybacks, making it the latest multinational giant to announce cutbacks as global oil demand craters.

The state of play: Chevron, the second-largest U.S.-based oil company, said around $2 billion of the cuts would be focused on shale, largely in the Permian Basin region.

  • More broadly, companies of various sizes are announcing spending cuts as they grapple with the stunningly fast changes in oil markets.
  • European-based multinationals Shell and Total recently unveiled deep cuts and suspension of share buybacks.

The big picture: The travel and economic freeze from coronavirus, combined with the collapse of the Saudi-Russia output-limiting deal, is upending the oil sector as prices have collapsed.

  • Analysts are racing to keep up with how much the global appetite for oil will fall this year, with many projections seeing a loss of millions of barrels per day.
  • A number of projections show a near-term decline in the 10 million barrel per day range.
  • For instance, the firm Thunder Said Energy sees a Q2 drop of 11.5 million barrels per day and a full year-over-year decline of 6.5 million.

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