BP cuts 10,000 jobs as oil inventories rise

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British oil and gas giant BP (NYSE: BP) is expected to reduce its global workforce by approximately 10,000 people. In an email to employees, CEO Bernard Looney announced the job cuts, which account for about 15% of the company’s workforce. This is a reversal of the corporate moratorium on job cuts while the COVID-19 crisis has hit the industry hard.

Today’s announcement was announced as many oil inventories rebounded after the announcement that the group of OPEC + oil-producing countries had agreed to extend their record-breaking oil reduction contract. oil production until the end of July.

Image source: Getty Images.

“I can’t make the worries go away”

In the email, which was obtained by numerous media outlets, Looney pointed out that BP, like most major oil companies, continues to burn more money than it makes every day. After three months of delay, BP joins the ranks of the other oil and gas majors to reduce its workforce. Even though prices have risen sharply in the past month, global demand for oil is still dropping sharply, while oil production – even with the OPEC + deal removing almost 10 million barrels a day from the market – continues to exceed consumption.

As Looney told the employees, he “can’t do [their] worries go away. “BP recorded a loss of $ 4.4 billion in the last quarter and a sequential decline of almost 90% in operating cash flow. Free cash flow increased from almost $ 4 billion in the previous quarter to $ 2.84 billion in negative free cash flow.

Overcoming a prolonged slowdown

Although many oil inventories have rebounded in the past month due to higher crude prices and sharply lower oil production, oil producers continue to record massive losses. Crude prices are still below the breakeven point for most producers, while demand is still down 20% in much of the world. With record levels of oil in commercial storage, offshore storage in transport vessels and record levels of refined products in storage, the industry could face a prolonged slowdown.

To overcome this slowdown, BP is taking steps to reduce costs. As a result, another 10,000 people will reach the global ranks of the unemployed.



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