The distressed nature of the oil industry is such that firms need to see higher prices to be confident of obtaining the bounteous offerings the sector once gave to investors. However with the stability of oil supply becoming irregular following OPEC's commitment to disrupt new competition as well as the limited economic growth expected globally, one wonders if the optimism that's re-entered the prospects of the oil market might've stretched further than practicality.
When considering all commodity prices came under severe pressure over the last two years due to a larger than expected economic contraction from China, big oil firms were better placed relative to major mining players in terms of their balance sheets which can't be denied given the resounding margins made when oil prices sat at lofty levels close to $100.
In the article below it's suggested that oil majors could be forced into restructuring their books with the swells of debt growing by the year. If this were to happen on the scale we've seen happen with global miners it would most definitely shape up the industry to be leaner with efficiencies.
Besides this fact an underlying reality is setting the trend to the industry that's been absence for some time. The correlation between oil producers profits with the oil price determined by the collusive monopoly in the market OPEC has begun to decouple as the rivalry between global competitive firms intensifies.
Oil giants' debt doubles to a combined $138 billion https://t.co/GxRpIN3kJP pic.twitter.com/vozqERo2K3— Bloomberg (@business) August 5, 2016
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