Oil Companies Struck by COVID-19

Oil Companies Struck by COVID-19

(FinancialHealth.net) – The oil industry is taking a beating in 2020. In April, prices dropped into negative territory for the first time in history. Although prices have improved since then, it may not be enough to save hundreds of US oil companies.

According to a report in the Financial Times, roughly 250 companies could go bankrupt if the prices don’t start rising quickly. In fact, 17 producers have already filed for Chapter 11 bankruptcy. The COVID-19 pandemic is largely to blame as demand for gas dropped while people were forced to stay home to slow the virus’ spread. The shale oil industry in the US has lost $26 billion in the first quarter of the year as a result.

President Donald Trump is monitoring the situation. On May 12, he tweeted that the rising prices would help American companies.

The prices might not be rising enough. The Times report found the price per barrel is still “well beneath average break-even oil prices.” If things don’t turn around soon, countless jobs could be lost, and even more Americans could suffer as a result of the pandemic. This scenario is one of the many reasons President Trump is pushing to reopen the country and “transition to greatness.”

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