One cannot but encounter the fact that the current low oil price environment negatively affects the oil industry; all in all, free falling oil prices occur as headwind predominately for huge production enterprises. On the other hand, it is important to indicate that the unfavourable price policy occurs as a decisive factor contributing to development of downstream companies. Obviously, downstream players are likely to undergo a substantial revenue growth due the recent fall in oil prices. The focus here lies in arguing that the low-cost environment incorporates a number of extremely attractive opportunities for downstream businesses. Notwithstanding this fact, financial prospects across the downstream sector should not be considered as entirely equal.
To be precise, it is worth saying that for petrochemical enterprises based in Europe, downward spiral in oil prices will result in exceptionally positive growth effects, whereas U.S. companies will confront a serious hurdle. On the whole, it becomes apparent that downstream enterprises have to get adapted to 21st century reality of prices and come up with the strategies, which would give the chance to benefit from today’s decline in oil prices, respectively. In addition, one should clearly understand a dire need to move quickly, since, in view of many, there is a high probability of the oil price rising in the nearest future; however, the others think that “... it will be years before oil returns to $90 or $100 a barrel, a price that was pretty much the norm over the last decade.” (Krauss, 2016)
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To sum up, one has to know that today’s decline in the price of oil is likely to improve the business environment even though a number of experts directly associate low prices with destocking of petrochemical supply chain. Overall, downward spiral in oil prices will result in lower product prices that widely-acknowledged economists consider as an integral part of tight market conditions.
References
Kraus, C. (2016 April 18). Oil Prices: What’s Behind the Drop? Simple Economics. The New York Times . Retrieved from http://www.nytimes.com/interactive/2016/business/energy-environment/oil-prices.html?_r=0
