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