Major layoffs are going to be a common theme over the upcoming weeks and months as more companies around the world try to cut down on costs in any way that they can. The energy sector has been one of the hardest-hit industries in the entire world, thanks to plummeting oil prices due to an ill-timed Saudi-Russia price war. Although prices for oil have recovered somewhat over the past month or two, companies are still losing money across the board. One of the largest oil companies in the world, British Petroleum or just BP (NYSE: BP), announced it would be cutting 14% of its global workforce.
The British energy giant issued a statement that it would be firing around 10,000 of its global workforce, primarily among white-collar, office-based jobs. While low oil prices have played a role, what has truly decimated demand for energy commodities was the coronavirus pandemic and the resulting decline in the global travel and tourism industry. Since then, many oil companies have ended up going bankrupt.
BP will also freeze pay increases for all senior-level managers and executives in an effort to try and get costs under control. This announcement follows the new appointment of the company’s novel chief executive, Bernard Looney, who took over the reins of the company back in February. He has since said he was working on a new reorganization plan for the company to help streamline operations and further cut down operational expenses.
“It was always part of the plan to make BP a leaner, faster-moving and lower carbon company,” wrote Looney in an email to company employees. “Then the Covid-19 pandemic took hold…The oil price has plunged well below the level we need to turn a profit. We are spending much, much more than we make—I am talking millions of dollars, every day.”
At the moment, BP’s current workforce sits at around 70,000 employees, with these expected job cuts expected to reduce expenses by an extra $2.5 billion by 2021. However, Looney warned that further job cuts could be on the horizon as well, something that has undoubtedly made many employees at the oil giant quite worried. Nor is this the first major job layoff announcement in recent weeks. Oil giant Chevron announced earlier that it planned to cut 15% of its global workforce, around 6,000 jobs, in an effort to cut costs as well.
Shares of BP didn’t respond much to the news. While on the London Stock Exchange, BP’s stock is down around one percent, on the NYSE shares are actually up around 3% so far. As for oil prices, barrels of West Texas Intermediate are trading at around $38, while Brent crude is trading around $41 per barrel.
British Petroleum Company Profile
BP is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2019, it produced 2.3 million barrels of liquids and 9.5 billion cubic feet of natural gas per day, including volumes from its 20% ownership interest in Rosneft. At year-end 2018, reserves stood at 19.9 billion barrels of oil equivalent, 57% of which are liquids. The company operates refineries with a capacity of 1.9 million barrels of oil per day. – Warrior Trading News
