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Russia Considers Extending Oil Output Cuts Beyond June

Russia Considers Extending Oil Output Cuts Beyond June

Russia’s Energy Minister Alexander Novak…

Marathon Oil Lays Off 200 Employees

Marathon Oil has laid off 200 employees in response to persistently low oil prices and oil demand devastation.

"Marathon Oil confirms that it has made the strategic decision to reduce its organizational footprint in response to extremely low commodity prices and much lower oil demand due to COVID-19," the company said, as quoted by the Houston Chronicle’s Sergio Chapa. "As a company, we’ve dramatically cut our 2020 capital program, reduced activity across our U.S. operations, and completed other necessary cost-cutting measures."

This is just a snapshot of a job loss trend that will be gaining speed in the coming weeks. In just the ten days to April 23, 2,500 people in the Texas oil industry lost their jobs, Chapa wrote, from a total 13 companies. With rigs getting idled and wells getting shut in, thousands of jobs are at risk.

And the loss may be permanent.

Earlier this month, Norway's Rystad Energy warned that as many as 533 U.S. oil companies could go bankrupt if oil stays at around $20 a barrel. At the time of writing, West Texas Intermediate was trading at $19.33 a barrel but there is serious downward pressure on the benchmark from oil storage space, which is filling up fast, with analysts expecting Cushing to reach its limit before this month’s end.

More pain is coming for the industry. According to Rystad Energy, oil production in the Permian, Eagle Ford, and Bakken will shed 900,000 bpd, 250,000 bpd, and 400,000 bpd, respectively, during this quarter alone. That’s a total 1.55 million bpd, hundreds of shut-in wells that may never produce again, and many more jobs lost as the demand for drilling, servicing, and maintaining these wells vanishes.

Earlier this week, media reported that Washington was mulling over a lifeline for the industry that could include taking stakes in companies. However, an Energy Department spokesperson told the Washington Examiner a day later that there will be no stake-taking.

“The Trump Administration is not taking equity positions in or nationalizing energy companies," Shaylyn Hynes said. "Media reports to the contrary are categorically false."

This leaves loans under different financial support programs as the only way the federal government can help the struggling industry and mitigate the impact of the crisis on jobs.

By Irina Slav for Oilprice.com

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