After three consecutive years of growth, the oil services market is set to slide into recession in 2020 if oil prices remain at their current low levels, Rystad Energy He said on Wednesday.
According to Rystad Energy, total global revenues of oil service companies will fall by 4% in 2020 if oil prices remain stable next year.
This year, the oil services market is expected to grow by 2% to $ 647 billion, according to estimates by the energy consulting and business intelligence firm. But if oil prices remained at around 60 dollars per barrel Brent Crude, revenue will probably fall to around 621 billion dollars next year, ending three years of consecutive revenue growth, warns Rystad Energy.
"Lower oil prices require negative growth in the services market in 2020," said Audun Martinsen, head of oil services research at Rystad Energy, in an industry update.
"For suppliers, this means that a three-year growth history will end regardless of the market segment you look at," added Martinsen.
The largest incidence on oil service revenues would be the US shale industry as it is expected to contract by 6% next year. Rystad Energy has said that purchases of offshore oil services have fallen by 1 percent as companies would reduce exploration activity to reduce costs at these oil prices.
"This new market vision is in stark contrast to what was previously expected when oil price estimates were around $ 70 for 2020. At that oil price, the services market should have grown by 2%, held back by the "Offshore and shale. However, downside risks have increased in the oil market and we could face further headwinds in 2020," said Martinsen.
Starting in 2021, the oil services market should recover from what is now expected to fall for 2020, Rystad Energy said.
In the past few months, the US shale patch has been preparing for a long time for weak oil prices, and oil drilling and service companies have reduced staff and reduced budgets to withstand the slowing of the frantic growth of the North America.
By Tsvetana Paraskova for OilScore
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