Impact of COVID-19 on the Global Upstream Services Market
The outbreak of the COVID-19 pandemic has affected the global economy with a profound impact on various sectors, including oil & gas, energy, and manufacturing. The pandemic has not only disrupted the supply chains of the oil & gas industry, but it has also hampered the demand, exploration, and production of oil and gas. The majority of the countries have imposed lockdowns that have brought imports and exports of goods and services to a standstill, thus lowering the demand for oil and gas across the world. The COVID-19 pandemic has also caused financial losses to oil & gas exploration companies. Furthermore, the oil & gas industry requires labor for performing essential operations at exploration and drilling sites. Safety measures such as social distancing and travel restrictions have been enforced by governments to curb the spread of COVID-19, which has created uncertainties in the availability of workers, drastically cutting down the profit margins of companies engaged in the business of oil & gas exploration and production.
Moreover, according to the BP Statistical Review of World Energy 2020, the global production of oil decreased from 95,254 thousand barrels per day (TBPD) in 2018 to 95,192 TBPD in 2019. Therefore, the COVID-19 pandemic has considerably disrupted the momentum of the oil & gas industry. All these factors have, in turn, affected the upstream services market negatively. Furthermore, the crash in oil prices and the uncertainty around the changing government policies across the globe have dealt a devastating blow to the global economy.
World Liquid Fuels Production and Consumption (Million Barrels/Day)
Furthermore, major oil-producing countries such as the US, the UK, Germany, China, and Saudi Arabia, have witnessed a steep fall in the demand and supply of oil and gas, which has significantly impacted the global upstream services market. The global players are, therefore, focused on the development of preventive measures and new business models to address the situation to meet the energy demands of the global oil & gas industry.
Source: U.S. Energy Information Administration and Short-Term Energy Outlook, May 2020
Source: Primary Experts, Secondary Sources, and MRFR Analysis