Business strategy review
Industry drivers Nine out of ten (92%) of those we surveyed said the slump in oil prices has affected the majority or the entirety of their business, and expectations of any significant price increase are muted. While 8% think the cost of Brent crude will go higher than USD 50 a barrel this year, most (87%) predict that it will remain low to moderate, at USD 30-USD 50. The majority of those surveyed expect production levels to be maintained (49%), with less than a quarter (23%) expecting output to decrease.
In 2016, do you expect global production in the oil sector to:
Do you predict that in 2016, the average oil price (Brent crude/barrel) will be:
Increase 28%
Higher than USD 50 8%
Between USD 30 - USD 50 87%
Remain steady 49%
Lower than USD 30 5%
Decrease 23%
In this case, producers will continue to face the challenge of sustaining production while staying in business if values stay depressed. Inevitably, for many businesses this means continued cost-cutting: reducing workforce numbers and cancelling or shelving projects as they look to become leaner and more efficient. If, however, prices do rebound, what then? Making too many cuts may in turn create new problems, leaving some businesses facing skills shortages and capacity constraints which could severely curtail their ability to capitalise on the recovery.
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