Oil investors lose $230b after Opec move

Crude slump over more than 18 months makes it one of the longest downturns in decades

Investors around the world have seen $230 billion (Dh844 billion) wiped off the value of oil companies in the week since Opec sent crude prices plunging to a seven-year low by abandoning its output limit.

Companies producing, refining, piping and exploring for oil, along with those that provide them with services, had a market value of about $3.73 trillion as of yesterday, compared with $3.96 trillion on December 3, the day before the Organisation of Petroleum Exporting Countries’ meeting in Vienna.

ExxonMobil Corp, the world’s biggest oil company, has lost $11 billion of its value and PetroChina Co more than $16 billion, according to data compiled by Bloomberg. Crude’s slump has lasted for more than 18 months, making it one of the longest downturns in decades and forcing companies to slash spending, reduce their workforce and delay projects.

Energy companies are the worst performers in the MSCI World Index this year, even below mining companies that have suffered a slump in the price of commodities from iron ore to copper.

“Companies must repeat the same size of cuts they’ve already announced to be able to cope with oil prices this low,” said Alexandre Andlauer, a

What ExxonMobil Corp has lost since the Opec decision.

Executive Officer Claudio Descalzi.

The MSCI World Energy Sector Index, a measure of 107 companies, is down more than 23 per cent this year, heading for the steepest loss since 2008. Chevron has lost 20 per cent this year while Royal Dutch Shell Plc, Europe’s largest oil producer, is down 33 per cent and trading near the lowest since July 2009.

The global oil surplus will persist at least until late 2016 as demand growth slows and Opec shows “renewed determination” to maximise output, the International Energy Agency said yesterday in its monthly market report.

Opec effectively dropped its production limits at its December 4 meeting, potentially bringing millions of barrels of additional oil to the market as Iran prepares to raise output once sanctions against it are lifted.