Oil and gas explorers and producers around the world have slashed their planned investments by $1 trillion since the drop in oil prices, oil and gas research firm Wood Mackenzie said in a report Wednesday.

Spending on development between 2015 and 2020 is estimated to shrink by 22% or $740 billion since oil prices started to drop two years ago, ballooning to $1 trillion if cuts to conventional exploration investment are added in, the research firm said. Wood Mackenzie expects to see further cuts throughout the year and investment levels continue to shrink as more projects are dropped and companies struggle to break even.

"The impact of falling oil prices on global upstream development spend has been enormous," Wood Mackenzie principal analyst Malcolm Dickson said. "Companies have responded to the fall by deferring or cancelling projects and costs have also fallen."

The near-term impact is even more severe: Capital expenditures will be down by around $370 billion or 30% in 2016 and 2017 versus expectations before oil prices began to fall.

Earlier this year EOG Resources (EOG - Get Report) cut its expected 2016 spending by 45% to 50% to $2.4 billion to $2.6 billion while Chesapeake Energy (CHK - Get Report) did so by 57% to around $1.5 billion, Apache (APA - Get Report) by 60% to about $1.6 billion, Marathon Oil (MRO - Get Report) by 50% to $1.4 billion and Devon Energy (DVN - Get Report) by 75% to an estimated $1.3 billion.

The Wood Mackenzie figures came out before a much anticipated energy supplies report expected mid-morning from the Energy Information Administration.

The American Petroleum Institute said after the markets closed Tuesday that U.S. oil inventories rose by 1.2 million barrels for the week ending June 10 versus an expected 1.4 million barrel drop.

Deloitte also weighed in, saying in a report Wednesday morning that the global oil and gas exploration and production industry faces a $2 trillion funding gap over the next five years that could threaten the future availability of reserves and production.

Oil prices dropped on Wednesday on fears that the world continues to be oversupplied, with Brent prices trading down to $49.50 and West Texas Intermediate sliding to $48.20.

Wood Mackenzie's Dickson said almost every oil producing country has seen some form of spending cuts, with the deepest being in the lower 48 states of the U.S., where capital investment is being halved over the next year by $125 billion. He said it's mainly due to a big drop-off in drilling, with the onshore rig count sliding by 53% from 2015 to 2016.

Russia also has seen a large drop off, with investment down by 40% over the next two years, but much of that is attributed to the rouble depreciating against the dollar. The firm said the country is keen to maintain its production by continuing to drill, reaching another post-Soviet liquids production record of 10.9 million barrels per day in March.

The Middle East has generally been less impacted as several countries spend to maintain market share with no drop expected in Saudi Arabian investment between this year and next, the report says.

The global spending cuts have impacted production, with Wood Mackenzie expecting 7 billion barrels of oil equivalent less to be produced between 2016 and 2020 than was anticipated before the oil price drop. It forecasts 3% or 5 million barrels less global production this year and 4% or 6 million barrels less next year, with onshore U.S. accounting for 70% of the fall.

Conventional exploration investment for 2015-2020 is $300 billion less than expected in 2014.

On a more positive note for operators, cost deflation has played a major role in driving down spending, with costs in the U.S. unconventional sector last year falling by 25% on average from their 2014 peak. Wood Mackenzie expects another 10% reduction this year.

Dickson said a select few projects already in progress will continue because costs have been cut substantially to hit economic hurdle rates. "But kick-starting the next investment cycle will require more cost deflation and project scope optimization along with confidence in higher prices and arguably fiscal incentives," he said.