MOST oil producers in the UK’s North Sea are still competitive even in the face of massively depressed oil prices, a leading trade association has said.

Oil companies have been squeezed in recent weeks as the price of Brent crude, the main benchmark used by UK producers, dropped to lows not seen in more than 20 years.

However, although they are in an “unpleasant place”, many oil firms have hedged large portions of their production, giving them a lot more breathing space, said Mike Tholen, sustainability director at Oil & Gas UK. It means buyers have already agreed to purchase oil from the producers at a price fixed before markets collapsed.

Tholen said: “Most of the portfolio in the UK is still competitive at $30 a barrel. There is still the ability to sustain operations at this period, even at current prices if they prevail for a while.”

Oil prices in the US dropped into negative territory earlier this week, with producers paying buyers to take oil off their hands.

A similar collapse is still not expected to be repeated in the UK; however, the price of a barrel of Brent oil briefly dropped below $19, a drop of more than two-thirds from the beginning of the year.

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