Oil Company Defaults Are Spiking

Oil Company Defaults Are Spiking

Many experts believe that today’s crisis is similar to the oil crash in 1986. “Defaults are skyrocketing again.” In December, exploration and production company defaults topped 11%, up from just 0.5% the previous year, according to Fitch Ratings.

“Energy companies borrowed a lot of money when oil was worth over $100 a barrel.” “The returns seemed almost guaranteed if they could get the oil out of the ground.” However, oil now is barely trading above $30 a barrel and companies can’t pay back their debts.

The last really big oil bust was in the late 1980s. “Now the Saudis (and other members of OPEC) are in a battle with the United States, which has become a major player again in energy production.”

No one wants to cut back on production and risk losing market share.

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