By Carlos A. Quiroga
The fall of oil prices across international markets, with no prospects of a quick recovery, has begun to claim its first victims.
The six biggest European oil companies have all separately announced massive layoffs that that amount to at least 100,000 workers, as a result of multi-million dollar losses.
The economic slowdown in China is generally considered to be the main factor in the drop in worldwide oil demand, forcing crude prices down.
However, there is clearly an oversupply and exporters are reluctant to reduce their production as oil giant Iran normalizes its production, following the end of the embargo.
Trapped by these fundamentals, the global market will have difficulty getting out of this rut, which has kept oil prices around $47(WTI) and $53 per barrel.
The Dutch-English oil company Shell, which is laying off 6,500 workers this year, said that it is redoing its budget based of the projection that the price of Brent crude will remain around $55 per barrel through the end of the year.
Even small players in the market, like Bolivian oil company YPFB, have been hit by losses. YPFB is now selling natural gas at just over half of the price it did three years ago.
From a peak of $11.20 per million British thermal units (MMBTU) in 2012, the price of gas exported to Argentina has dropped this year to $6.10. The price of sales to Brazil dropped from $9.40 to $5.70 in the same period.
As a result, Bolivia’s total exports have suffered a year-to-year drop of almost 50% in the first semester.
YPBF cannot do anything to push the price of gas, which is dependent on oil prices across international markets.