BP has reported its worst annual loss of about €4.5bn in 20 years representing a 91 percent drop in income. The oil company has struggled in 2015 because of the steep decline experienced in the oil market.

Considering its replacement cost profit which the oil company uses to base its net income, the fourth quarter of 2015 only netted $196 million from $2.2 billion in the same period last year. This figure is considerably lower than the $730 million that some analysts have predicted.

BP's fourth-quarter losses were $2.6 billion due to low oil prices.

In a company statement, Bob Dudley, BP Chief Executive said: "We are continuing to move rapidly to adapt and rebalance BP for the changing environment."

These figures were based on an oil industry accounting standard that considers account variations in oil prices and does not include operating costs.

BP also earmarked $443 million in the quarter to cover the expenses connected with the Gulf of Mexico Deepwater Horizon oil spill in 2010. Overall cost of this spill is now $55.5 billion.

As price of crude oil continues to fall, oil companies are cutting jobs and forestalling investments. The benchmark for North Sea oil prices, Brent crude, dropped 34 percent in 2015. Oil price hit $27.10 per barrel representing a 12-year low. On Monday, it traded at $34.13. As recently as September 2014, the same benchmark traded more than $100 per barrel.

"We are continuing to move rapidly to adapt and rebalance BP for the changing environment," said Bob Dudley in a company statement. "We're making good progress in managing and lowering our costs and capital spending, while maintaining safe and reliable operations," he added.

British Petroleum also stated that it has slashed controllable cash expenses by $3.4 billion in 2015. It estimated that further cuts of nearly $3.6 billion will be made in the future. The oil company also predicted a potential $5 billion in asset sales in 2016.