Oil firms hoard cash, delay spending
The article discusses the rise in oil prices due to the conflict in the Middle East, which has led to a reduction in global oil production by at least 3%. It is expected that exploration and production companies will generate free cash flows of up to $495 billion by 2026 if the oil price remains steady at $90 per barrel. The analysis shows that this short-term increase in liquidity has not impacted the disciplined spending of oil companies, which are focusing on strengthening liquidity and reducing debt. Meanwhile, there is a growing number of mergers and acquisitions as companies seek to acquire low-cost assets, especially in the natural gas sector. However, the long-term challenge remains the anticipated decline in production for more than 70 companies, with reductions exceeding 50% between 2030 and 2040, due to a lack of new investments and the natural depletion of existing assets.
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