Insight
Is oil price volatility a threat to upstream production, investment and supply chains?
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Report summary
Is the recent oil price volatility a threat to production, upstream investment and its supply chains? Oil and gas company share prices have fallen by an average of 15%, with US-focused E&Ps the worst hit. We now expect global upstream development spend to fall year-on-year for the first time since 2020. We assess the impact of global turmoil and trade wars on upstream supply, investment and costs.
Table of contents
- Executive summary
- Slides and key messages
Tables and charts
This report includes the following images and tables:
- What would lower oil prices mean for investment and supply?
- Prices would need to fall much further before material flowing supply is threatened
- US Lower 48 crude production will be impacted slightly, even at current prices
- The industry is far from survival mode, but some will be more concerned than others
- Capital allocation decisions are made based on portfolios and overheads, not SRMC’s
- Upstream spend likely to fall in 2025, for the first time since 2020
- At US$65/bbl, current prices aren’t low enough to send the US rig into a steep fall
- Despite robust economics, some projects will be delayed due to ongoing uncertainties
- The US’ tariffs created a chain of consequences for operators and their supply chains
- US-specific: project delays are a bigger risk to valuations than tariffs in the Gulf of America (GoM)
- US-specific: tariffs limit the chance of continued Lower 48 well cost deflation this year
- US-specific: Lower 48 oilfield service rates would soften to offset activity pullbacks
What's included
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