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.
"It was a stunning reversal for the largest U.S. oil producer, which two weeks ago pledged to 'lean in' to the market drop and maintain outlays in a belief oil demand would rise in the long run."— Via Reuters' Gary McWilliams
What's new: Goldman Sachs analysts now estimate that global oil consumption has fallen by 8 million barrels a day, and they see Brent crude falling to $20 a barrel next quarter, per Bloomberg.
Catch up fast: The oil market has been upended by two huge forces: the deep cuts in travel and the economic fallout from COVID-19 that's cratering oil demand, and the collapse of OPEC-Russia production-limiting deal.
Where it stands: Exxon is among many oil companies large and small announcing major cutbacks.
- Just yesterday the large U.S. independent producer Pioneer Natural Resources said it's reducing its planned 2020 capital spending by 45%.
- And a top BP official yesterday said the company could lower its spending by 20%.
What they're saying: In a joint statement, OPEC and the International Energy Agency said they reviewed the effects of the pandemic and price collapse on "vulnerable developing countries."
What they found: "[I]f current market conditions continue, their income from oil and gas will fall by 50% to 85% in 2020, reaching the lowest levels in more than two decades, according to recent IEA analysis." (Emphasis added)
- "This is likely to have major social and economic consequences, notably for public sector spending in vital areas such as health care and education."