An announcement from Moody's Global Credit Research overnight highlights the challenges facing oil industry players:

Sustained overcapacity, low oil prices will pressure global offshore drillers through 2017

  • Persistent oversupply of rigs
  • Combined with low oil prices

... Will prolong the downturn in the offshore contract drilling industry, weakening the credit quality of offshore drillers through 2017

  • "The rig industry's overcapacity problem could last for several years," says Sajjad Alam, a Moody's Assistant Vice President and Analyst

Moody's expects oil prices to remain low through 2017 because of global factors such as

  • greater production efficiency
  • strategic need for certain nations to maximize oil production
  • slowing growth in China
  • a strong US dollar
  • the possibility of new supply coming online from Iran