Exxon Mobil will publish its first quarter earnings today amid the global energy glut caused by the COVID-19 pandemic.
Current predictions suggest Exxon Mobil’s year-on-year per-share earnings declined by as much as 92%, and revenues likely dipped by at least 15%. In response to the decrease in energy demand during the pandemic, Exxon cut spending by 30% in early April. The oil major also reduced investment in shale, natural gas and deep-water production.
The US oil industry now faces a number of serious challenges due to the current pandemic. US shale companies have slashed both existing production and planned projects because of the sustained fall in oil prices. The price plummet has put significant pressure on oil storage facilities, which led to an unprecedented drop in the oil futures price last week. Potential investors will remember this volatility spike well into the future.
While the OPEC+ production cut begins today, the imbalance between supply and rock-bottom demand is likely to keep prices low. Many smaller oil companies are expected to file for bankruptcy in the coming weeks. A long-run reduction in oil demand, as predicted by some economists, could indicate that the oil industry may never fully recover from the crisis.
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Wescott is a Copy-Editor and Senior Analyst. His thematic focuses are international security, politics, economics and public policy.