Italian energy giant Eni SpA reported a 94% drop in first-quarter earnings and cut production forecasts for the year as demand continues to shrink amid the spread of coronavirus.

Although the large decline in profits reflects in part the high tax rate, it provides signals to the rest of the industry, with the negative impact of the fall in oil prices continuing in the coming quarters, as investors focus on how companies in the sector deal with one of the most turbulent periods in the history of the oil markets.

Eni’s adjusted net income decreased to 59 million EUR (63.5 million USD) in the quarter from 992 million EUR a year earlier. The company lowered its production forecast for this year to about 1.8 million barrels of oil equivalent per day, from 1.84 million barrels previously, as a result of cost reductions and “pandemic effects”.

Oil companies are under tremendous pressure as the coronavirus reduces demand and sends prices down to negative levels. The Brent International benchmark is trading at an average price of 50.82 USD per barrel during the first three months of the year, or 20% less than the same period in 2019.

In March, Eni cut back on its capital expenditure (CAPEX) plans and canceled its planned buyback of 400 million shares. On Friday, the company deepened its CAPEX cuts, forecasting a contraction of 2.3 billion EUR this year, down by 30% from originally planned. A large part of the redundancies will be implemented within the Research and Production Unit.

Eni expects the demand for oil, natural gas, and energy to recover gradually in the second half of the year. The company estimates average Brent prices of 45 USD per barrel in 2020 and 55 USD per barrel next year.