Mar 24, 2020 - Energy & Environment

Chevron joins other majors making big cutbacks amid cratering oil demand

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.

Go deeper: AI energy startup Worlds snags Chevron and Petronas as backers

Go deeper

The fallout from oil's collapse

Data: Yahoo Finance; Chart: Axios Visuals

ExxonMobil, citing an "unprecedented environment," said last night that it plans to "significantly" cut spending in light of the coronavirus and the collapse in oil prices.

Why it matters: The oil giant's announcement is the latest sign of how deeply the upended market is affecting the sector.

Oil giants announce steep cutbacks

Photo: Karol Serewis/SOPA Images/LightRocket via Getty Images

Royal Dutch Shell and Total this morning announced plans to sharply cut spending and freeze share buyback plans.

Why it matters: The moves signal how cratering demand from COVID-19 and the collapse in prices are upending the outlooks for companies large and small.

Oil demand could plummet 20% due to coronavirus fallout

Illustration: Sarah Grillo/Axios

Analysts and oil industry officials are racing to keep up with how much oil consumption is falling as more countries and regions impose restrictions.

What's new: This morning Russell Hardy, CEO of oil trading giant Vitol, said he sees demand loss peaking at 15 million–20 million barrels day over the next few weeks. That's in the context of a roughly 100 million barrel per day market.