SINGAPORE: The steep drop in crude oil prices will affect Asian oil and gas (O&G) companies, says Moody’s Investors Service.
In a statement yesterday, Moody’s vice president/senior credit officer, Vikas Halan, said the drop in crude oil prices since mid-2014 would reduce the earnings and cash flows of Asian O&G firms and weaken their credit metrics in 2015.
“At the same time, the low prices will benefit most Asia-Pacific sovereigns given the region’s status as a net oil importer,” Halan said.
Crude prices more than halved between June 2014 and January 2015 due to a higher-than-expected oil output in the US and lower demand in emerging markets, Valan said.
“At the same time, with the slowing growth in worldwide demand, oil markets would likely remain oversupplied for the next two years.
“The demand-supply imbalance may worsen if China’s economic growth slows sharply or if significant lifting of economic sanctions on Iran further increases oil volumes,” Halan said.
Moody’s has lowered its price assumptions for Brent crude to US$55 per barrel through 2015 and US$65 in 2016. — Bernama