COVID-19 Causes Major Job Layoffs in the Global Oil Industry

The COVID-19 pandemic continues to cripple global businesses, and oil companies are ones that affected deeply. Recently, the crude oil price nosedived to around US$17 a barrel, and the price had fallen below zero dollars for the first time in history on Monday. However, the severe collapse in global oil demand due to the COVID-19 outbreak is now causing job cuts in the industry. According to reports, more than 51,000 drilling and refining jobs laid off last month. Even, oil and gas companies are also expected to lay off about 30 percent of their workforces in the first quarter of 2020.

According to data from the US Department of Labour and surveys by research firm, BW Research Partnership of 30,000 energy companies, job losses in March jump by 15,000 when ancillary jobs such as construction, manufacturing of drilling equipment and shipping are faded. The pandemic’s impact can be measured with the fact that the US’s benchmark index for crude oil, West Texas Intermediate Crude, plunged to minus 37.63 dollars, which created uncertainties across the industry. The trend was seen at a time when almost countries around the world are under lockdown and there is virtually no demand for crude oil.

Despite the deep slash in US crude oil prices, ICE’s Brent crude was still trading around US$25 a barrel level. According to reports, the sharp deviation was seen as WTI needs to be delivered physically at Cushing, Oklahoma, whereas for Brent contracts, deliveries can be done offshore at multiple locations.

This is the reason oil and gas companies are making massive job cuts. For instance, one of the world’s largest oil field service companies, Halliburton reportedly laid off 3,500 workers at its headquarters in Houston in March. One another company oilfield services firm Canary Drilling Services waned 200 staff and implemented across-the-board salary cuts, while Oklahoma-based Recoil Oilfield Services LLC laid off 50 workers after losing its contract with shale giant EOG Resources Inc.

CEO of Challenger, Gray & Christmas, an executive outplacement firm in the US, John Challenger said oil job layoffs in the first three months of the year rose an eye-popping 3,900% from the same period a year ago.

Oilfield service companies, which provide a large number of jobs in the oil and gas industry, are worst hit by the crisis caused by COVID-19. During the first quarter, Schlumberger (SLB) announced plans to cut 9,000 workers, while Baker Hughes (BHI) lay off 7,000 positions and Halliburton (HAL) would cut 6,400 jobs.

In its previous report released last week, BW Research reported that clean energy workers, including solar panel installers and electric vehicle manufactures, lost more than 106,000 jobs last month. Reportedly, the overall energy-related job layoffs stood at 303,000 in March.