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Forecast on reduction in Oil price due to shortage of storage places for crude oil & its impact on rising cost of human resource in Oil industries

Global oil storage could reach extreme volumes within weeks due to the corona virus (COVID-19). As the coronavirus crisis intensely reduces consumption and some of the world’s most commanding crude producers start to incline up their output. Supply, on the other hand, remains largely flexible due to a price war between Saudi Arabia and Russia. US producers don't want to be the first to flash by turning off production. This mean that the supply surplus is so epic that the world runs out of places to store crude oil. In other words refineries, storage capacity reached to its limit and expected to be likely hit its limit by midyear if current situation persists.

Although headline oil prices such as West Texas Intermediate and Brent are trading north of US$20 a barrel, some regional prices have recently leaped into single-digit territory. That is especially true for landlocked grades of crude where access to storage is even riskier. With the collapse of oil prices oil has reduced its value as compared to earlier.

The reduction in oil prices also effects the Human Resources. The oil and gas industry faces substantial challenges in the coming years. One of the most talked about HR challenge facing oil and gas companies due to the less financial activities in oil and gas sector will be Crew Change which means huge downsizing coming into the way. HR leaders will need to rethink how they organize workplace roles and tasks. While some of the jobs may not be eliminated, tasks within jobs will be affected, and in different ways. Some tasks will become entirely automated. Machines might replace human work force. Productivity gains will depend on this reinvention of both work and roles. Whether you call it job automation, or work limitation, there’s little doubt that it will be disruptive. There will be a period of transition for employees.

Even though it would be a great challenge for oil and gas industry in coming years, but most human resource professionals are up to the challenge. After all, the energy sector was built on innovation and we will keep moving forward.