Oil's dramatic fall in price will have serious effects on revenues and spending in the sector, according to some industry analysts, with one investment firm predicting a sector-wide "recession" that will last for several years.
Both U.S. crude and Brent futures fell to fresh 5½-year lows on Tuesday, with the former slipping below $48 at one stage. Weak global demand and booming U.S. oil production are seen as the key reasons behind the price plunge, as well as OPEC's (Organization of the Petroleum Exporting Countries) reluctance to cut its output.
This sector slump will lead to a fight to the death for oil firms, according to analysts at Bernstein Research. The research firm likened the current environment to the Hollywood movie "The Hunger Games", which portrays a dystopian post-apocalyptic future where the main protagonists battle each other to survive.
"Our research convinces us an oil services recession is largely unavoidable at even $80 a barrel...The Hunger Games have begun," Nicholas Green, a senior analyst at the company, said in a note on Tuesday morning.
Bernstein's Green believes that offshore activity will also face a "structural recession." He predicts that there will be only half of the new work available in 2015, compared to last year, and forecasts no material recovery before 2017.