Oil price recovers as industry calls on politicians to protect North Sea producers

Oil prices have halved since last summer, when they peaked at around $115

Many North Sea oil operations are thought to be unprofitable with oil prices below $60 per barrel (Reuters)

The oil price recovered from early losses and rose above $55 a barrel, as industry leaders called for politicians to protect North Sea producers brutally exposed by a recent collapse in prices.

Oil prices have halved since last summer, when they peaked at around $115 a barrel, sinking as low as $46 per barrel last month.

A summit in Aberdeen - a city dependent on the oil sector for thousands of jobs - heard industry leaders push for urgent tax breaks to help insulate the effects of tumbling crude prices.

Big North Sea players such as BP, Shell and Chevron have already cut hundreds of jobs from their North Sea operations with the prospect of more to come in what Scottish first minister Nicola Sturgeon called "a very challenging time for the industry".

Chancellor George Osborne last December announced a North Sea investment allowance designed to reduce the effective tax rate for companies investing in the region.

Crude prices fell to $51.67 a barrel in early trading following a surge before the weekend, but later hit as high as $55.62 as investors focused on data showing a record decline in US drilling.

A boom in US shale production and a refusal by Opec members to cut supply have seen global markets flooded with oil while a faltering global economy hits demand.