Brexit effects on labour market.
In recent weeks, markets have been concerned with the negative policies of different countries and the global economy apparently unstable. EU countries have focused on the results of the referendum on Great Britain’s exit from the EU.
In 2013, the UK became a net importer of petroleum products. The most important sources of UK oil are France and the Netherlands. Vote out of the EU and increase economic and political instability may lead to the depreciation of sterling, resulting in higher costs for imports and creating uncertainty regarding the UK energy supply.
After the chaos caused by the referendum in the UK, effects felt in oil prices, reaching the amount of $ 48.30 / barrel. Oil increased by 80% more than in the first quarter of 2016.
Long-term oil and gas market developments in the UK raises a big question mark, because the market has already begun to encounter difficulties.
One of the Brexit effects on the Oil and gas industry is barriers in trade.
Most workers in the UK oil & gas industry are employed by European companies. If the United Kingdom’s decision will be materialized to leave the EU, the cost of hiring British workers will increase greatly, so that big companies will turn their attention to the recruitment of persons in the EU area will have much lower employment costs.
Limited manpower and capital mobility are issues that will be faced following the decision. Britain’s limited ability to attract labor in the oil and gas industry will discourage the investments in the medium and long term.
What will be the Brexit effect on oil prices?
Economists say that Brexit will impact the oil and gas industry, what is not shared by analysts in the field. In the short term, oil prices dropped by $ 2/barrel due to lower demand for oil. However the oil market in the UK is in a good position. The immediate results of the vote are not only Brexit but falling oil prices and slower economic growth will implicitly lead to lower oil demand.
In early 2016, the oil and gas market seemed to be balanced, in analyzes made by specialists in the field. Oil prices will not be immune to the financial changes caused by Brexit. The results of the referendum could affect demand for oil and gas, which could lead to Europe’s economic slowdown, oil and gas investments in the North Sea and UK.
With rising oil prices, the number of rigs has doubled in recent weeks, which has led to concern investors about the evolution of the already over saturated market.
Companies like British Petroleum said it expects the UK decision made not to influence businesses or investments in the UK. They also said that details of the negotiation process on the future relations with the UK are clear because they expect to negotiate with the UK and EU in areas of common interest.
Also, it said that some big investors and oil companies could lose confidence so the situation will be reviewed until the return of oil price stability and demand.
Therefore, both the UK and Europe will be affected by the phenomenon of economically Brexit, and legislative. Regarding oil and gas industry, fluctuations in oil prices in the UK have influenced confidence in the UK market. A second referendum could lead to the delay or cancellation of projects partnerships with certain companies to a concrete decision regarding the political and economic situation of the UK.