Companies like BP, which said Tuesday it is cutting 4,000 jobs, are slimming down to cope with the slump in oil, whose price has plummeted to its lowest level in 12 years and is not expected to recover significantly for months, possibly years. California-based Chevron said last fall that it would eliminate 7,000 jobs, while rival Shell announced 6,500 layoffs.

Crude oil production in February from seven major US shale plays is expected to fall 116,000 b/d to 4.83 million b/d. Production from the Eagle Ford is seen dropping 72,000 b/d during the month to 1.15 million b/d, followed by a 24,000-b/d loss in the Bakken to 1.1 million b/d and 23,000-b/d loss in the Niobrara to 371,000 b/d.

“Companies have to be prudent in the face of what’s happening,” says Daniel Yergin, vice-chairman of consultancy IHS. “It’s a wrenching period for the industry.”

Natural gas demand is expected to rise to 199 billion cubic meters in 2016, Zhu Fang, head of market information department at the China Petroleum and Chemical Industry Association told Reuters after a media briefing by the association on Tuesday in Beijing.

Oil companies including Royal Dutch Shell and Chevron have already slashed tens of thousands jobs globally to deal with a near 75 percent drop in oil prices since June 2014 that has seen earnings collapse.

Crude's collapse from $100 a barrel since mid-2014 has already pummeled Russia, which relies on energy for about half its budget revenues and 40 percent of its exports. The latest slide compounds the problems facing President Vladimir Putin ahead of elections in 2018.

The escalating rivalry between Saudi Arabia and Iran is intensifying bilateral market competition, which some observers say eclipses in importance Saudi concern over expansion of supply from North America.

U.S. Rig Count is down 34 rigs from last week to 664, with oil rigs down 20 to 516, and gas rigs down 14 to 148.

Even if E&P clients are able to negotiate more favorable terms for their debt, the industry’s overextended balance sheets will put a cap on activity — even if oil prices rise. On the producer side, companies will most likely de-lever before they drill should some extra cash come in the door. For OFS, building all the new equipment such as walking rigs and big frac spreads to meet strong client demand has some players in this sector significantly over-levered.

Light, sweet crude prices for February delivery settled Jan. 7 below $34/bbl on the New York market, which was the lowest settlement for the front-month contract since February 2004. Brent crude oil for February also settled below $34/bbl on the London market Jan. 7.

More than $60 billion in unsolicited corporate takeover bids during 2015 were rejected, causing deal value to drop to a 10-year low. Aside from the Shell-BG deal, there were no corporate takeovers exceeding $5 billion. Fewer than 10 asset deals valued at greater than $1 billion occurred, following more than 30 annually during each of the previous 2 years.

Dow e-minis were down 380 points, or 2.26 percent, with 99,258 contracts changing hands at 8:13 a.m. ET (1313 GMT). S&P 500 e-minis were down 45 points, or 2.27 percent, with 578,860 contracts traded. Nasdaq 100 e-minis were down 130.25 points, or 2.93 percent, on volume of 108,831 contracts.

Crude oil prices ended 2015 below $40 per barrel (b), the lowest level since early 2009. Spot prices for the international crude oil benchmark Brent averaged $52/b in 2015, 53% below the level in 2014 and 49% below the average price over 2010-14. Spot prices for West Texas Intermediate (WTI) crude oil were also down 53% in 2015 compared with 2014, averaging $49/b for the year.

"We will be more subtle in our approach and may gradually increase output," Qamsari said. "I have to say that there is no room to push prices down any further, given the level where they are."

While Iran enjoys the world's fourth-largest proven crude oil reserves and the world's second-largest natural gas reserves, its production and export potential has remained largely unutilized as a result of the nuclear related sanctions. The sanctions have had a major impact on Iran's energy industry and have caused a number of cancellations or delays in its oil and gas upstream projects.