Weak oil, gas demand during early pandemic caused low prices, leading to spike bankruptcy filings, agency says
The coronavirus pandemic has led to a high amount of bankruptcies in the energy sector, according to Fitch Ratings on Monday.
Weak oil and natural gas demand in early period of the pandemic caused low energy prices, and this led to a spike in the number of bankruptcy filings, the global rating agency said in a report.
“Some filers were struggling for multiple years since the prior oil market price trough,” Fitch Senior Director Judah Gross said in the report.
“Persistent cash shortfalls were magnified by the historic coronavirus pandemic-related demand cuts for gasoline and aircraft fuel, and plummeting market prices.Others were unable to refinance or repay looming maturities,” Gross added.
Shortly after global quarantine measures, price of international benchmark Brent crude plummeted below $16 per barrel on April 22, 2020, according to official figures.
As rapid vaccination and normalization worldwide increased global oil demand, Brent crude price climbed above $77 a barrel on July 5 this year.