2020 Oil and Gas Industry Outlook: A midyear update
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2020 Oil and Gas Industry Outlook: A midyear update

Exploring oil and gas industry trends and the impact of COVID-19

Our original oil and gas industry outlook projected the biggest challenges in 2020 would be weakening economic growth, intensifying trade tensions, and global political risks. How will COVID-19’s impact on the oil and gas market change these predictions? And what industry trends might shape the remainder of the year? Our midyear 2020 oil and gas industry outlook provides actionable insights to help organizations recover and thrive in the short- and long-term.

Midyear Outlook: Understanding new oil and gas industry trends

The spread of COVID-19 has disrupted global financial and commodity markets, as well as the US oil and gas industry, now showing decline in energy demand without parallel. In an industry used to the highs and lows of economic and commodity price cycles, 2020 poses great challenges to oil and gas companies. While the facts on the ground are changing rapidly, we see three key trends that could shape the rest of 2020, setting the ground for a challenging 2021 and a nascent recovery in the early-to-mid 2020s.

How can oil and gas organizations remain competitive and emerge stronger in the wake of the COVID-19 pandemic? Explore our midyear outlook to address uncertainties and challenges from COVID-19’s impact on the oil and gas industry and to facilitate recovery in the remaining months of 2020.

Walking the tightrope—vigilance required to keep moving forward in 2020

As we, once again, move from one year to the next, how do we assess the oil and gas and chemical sectors’ performance in 2019 and its prospects for 2020? As always, there are headwinds and tailwinds, risks and opportunities, uncertainties and foreseeable trends, but in this report we aim to take stock of the main factors to watch for in 2020 across the diverse oil, gas, and chemical industry. Over the past decade, we have seen the heights of bullish optimism and seemingly limitless investment during the years of the $100 per barrel world, from 2011 to mid-2014, and the lows of the price crash and extended oil downturn, from mid-2014 to 2017. Neither extreme seems in the cards for an imminent return as the industry has learned valuable lessons from both episodes, but uncertainties are clearly still a challenge to performance and investment.

As we evaluate the most prominent trends and issues for the oil and gas and chemical sectors in this outlook, executives in these businesses seem keenly aware of wider macroeconomic and business environmental risks, which seem to be gaining strength. Among these are:

  • Weakening economic growth, not only in the United States but also in Europe and China; 
  • Ongoing, perhaps intensifying, trade tensions, which can create uncertainty, dampen growth, and lead to modifications in long-established supply chains; and
  • The many political risks, of course, including the US election cycle, the outcome of the Brexit process in Europe, and tensions in the Middle East between multiple states and non-state actors with different objectives.

And, while walking the tightrope across these shifting sands in 2020, fundamental changes in the long-term business environment could become more salient. So, attention to the coming disruptive forces associated with this century’s energy transition and sustainability imperatives is increasingly crucial alongside day-to-day positioning.

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