Shell, one of the largest oil companies in the world, warned that the low price of oil could reduce the value of its assets by up to $ 22 billion (17.9 billion pounds).
He said he expects oil to change hands at $ 60 a barrel in the long run and that it costs $ 35 this year and $ 40 next year.
Shell follows rival BP, telling investors that oil assets are not worth more than they used to be.
BP told investors this month that its assets could be worth $ 17.5 billion less.
Countries around the world have ordered people to stay indoors and not travel as a result of the coronavirus pandemic, which has caused a drop in demand for oil.
As a result, the cost of oil fell to less than $ 20 a barrel at the peak of the crisis, less than a third of the $ 66 it cost earlier in the year.
For a brief period, buyers were actually paid to receive oil delivery amid storage scarcity.
The price of Brent oil has rebounded in recent weeks and is currently trading at $ 41.47 a barrel.
“How individuals, governments and companies will respond to the Covid-19 crisis in the coming months will have long-term implications for the environment and the future of oil-producing companies and countries,” said Michael Bradshaw, global energy professor at Warwick Business. School.
Much will depend on whether world leaders decide to rebuild the global economy with fossil fuels or invest in green energy, he said, in accordance with the Paris climate agreement. It will also depend on the consumer’s taste, he added.
“For example, there is no guarantee that the transport sector will fully recover. After the pandemic, we may have a different attitude towards international air travel or physical work.”
“This will create a huge challenge for oil producers, especially if demand and prices do not recover sufficiently to support a managed transition to a more sustainable future.”
Oil companies like Shell and BP are trying to reform themselves as energy companies, absorbing greener energy and trying to keep investors away from the big dividends they traditionally pay.
In April, Shell cut its dividends for the first time since World War II, cutting two-thirds of payments.
Still, market watchers are considering whether these changes are taking place quickly enough, as Shell’s reduction in the value of its assets will make its debts appear much larger.
“The real question to follow is whether Shell’s rather pessimistic expectations are worse than expected,” said Nicholas Hyett, a stock analyst at Hargreaves Lansdown.
“Oil prices have spent much of the past five years below $ 60 a barrel, and while the collapse of several big shale names in the U.S. could reduce global supply, the prospects for demand are not robust.”