Flowers Consulting Blog
The industry is in the midst of a major adjustment as the price of oil (WTI) has stabilized at $50 per barrel. This represents a drop in price of ˜50% from prices merely one year ago.
The effect on small operators is being felt as more are reducing projects and some are even closing shop. However this is not as deep as the impact on oil service sector companies which have experienced major cutbacks in Q1 and Q2 of 2015.
According to the Houston Chronicle, Houston has seen a total of 150,000 layoffs due to this industry downturn. So far.
The future is hinging on supplies in the market which have seen a large increase due to the shale oil plays in Texas and North Dakota. Also, the global oil market is being influenced by the Chinese market which has seen changes in the past months. The Iran nuclear agreement is expected to add capacity to the global oil inventory but percentage-wise this will not be considerable so the impact should be minor.
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