While crude exporting countries worry about bearish forecasts for energy markets, the big oil supermajors can withstand fluctuating oil prices in the coming year, one ratings agency says.
Cost cuts in the industry from previous years and promising cash flow potential mean the world's largest publicly traded international oil companies (IOCs) — Exxon, Shell, Chevron, BP, Eni and Total — needn't worry even if oil falls to $50 a barrel, according to S&P Global Ratings.
"Supermajors and these guys, the big players, the IOCs, they reckon they can break even with Brent at $50 (per barrel)," Simon Redmond, senior director of corporate ratings at S&P Global Ratings, told CNBC Thursday. "So, whether its $65 or $60, they're looking pretty good. And they should be able to generate meaningful cash flow."
The ratings agency forecasts global benchmark Brent crude, currently trading in the $58 to $60 per barrel range, at $65 a barrel in 2019 and $55 in longer term. Other forecasters see the commodity at anywhere between $55 to as high as $80 in the coming year, underlining the lack of consensus and predictability in the market.
Last weekend's announced OPEC production cut of 1.2 million barrels by January did little to boost prices, deepening concerns among exporters that pressures like waning demand and booming shale production in the U.S. will only push prices lower. Brent has fallen more than 25 percent from its early October highs of more than $86.
S&P expects aggregate crude production to grow — something OPEC likely won't be thrilled about.