Oil prices may have stabilized after plunging in response to the coronavirus but are unlikely to rise much in coming months according to experts who have highlighted the grim implications of their analysis for the North Sea.

The Rystad Energy consultancy said production curbs agreed by major exporters could help put a floor under crude prices amid signs that demand has started to recover following moves to ease lockdowns around the world.

Brent crude traded at $35.68 per barrel yesterday afternoon, up $0.55/bbl on the day. It fell to an 18-year low of $15.98/bbl in April.

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“As the crude markets are rebalancing now in June, according to our latest crude supply-demand balances, the focus in the markets will shift to the speed of the recovery,” said Rystad’s head of Oil Markets Bjornar Tonhaugen.

However, noting uncertainty about how quickly demand for oil and gas would increase, Mr Tonhaugen predicted any recovery would be slow. He said prices would not return to pre-coronavirus levels as quickly as they had fallen. Brent crude sold for around $70/bbl in January.

Rystad reckons some UK North Sea fields will be taken out of production early as a result of the fall in prices this year.

It said nearly 10 per cent of all UK offshore assets have production costs above $25/bbl. This could make decommissioning them a better financial option than extending their lives if low prices persist.

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Efforts by firms to cut costs in response to the downturn that started in 2014 have left little scope for further economies to be made.

“Lackluster exploration results, growing regulatory stringency and a prolonged low oil price environment may lead operators to fulfill their asset retirement obligations in the absence of any lucrative competing investments,” noted Rystad.

Moves to shut down some fields early combined with the fact many others are reaching the ends of their expected lives could result in a huge increase in decommissioning activity in the UK.

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Rystad said the UK North Sea could account for $14 billion, a third, of the total expected global decommissioning spend of $42bn in the next five years.

It thinks around 80 UK North Sea fileds will cease production in that period.

“Almost 80% of the country’s oil and gas assets have produced more than 75% of their available resources,” noted Rystad.