With the price of oil reeling from a potential new Iranian nuclear deal, analyst Mayank Maheshwari and the rest of the Morgan Stanley Emerging Markets Oil & Gas team released a new report that focuses on the global outlook for the oil & gas industry. Morgan Stanley believes that cost deflation could provide a big boost to upstream cash flows for emerging market (EM) oil companies if the current oil cycle mirrors previous cycles.

Deflationary Trends

According to the report, the global oil industry is already witnessing lower service costs, wages and materials prices and an increase in operational efficiency. During the last major downward price cycle in oil in the 1980’s, the industry endured a 30 percent decline in capex and opex. Morgan Stanley predicts that this type of reduction could generate a $245 billion increase in free cash flow for EM oil companies between now and 2020.

Opportunity In Offshore And High-Cost Fields

The report indicates…

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