The world’s largest oil company has finally begun to feel the shocks of the unstable and crumbling oil markets. With oil prices reaching all-time record lows and the future of the market being in trouble, many questions were raised by financial analysts about what the situation of most of the large scale oil organizations have been. Soon after the oil futures were at a record low, the market witnessed a slight revival in the futures rate and made a small comeback. However the market low seems to have done a fair bit of damage to the oil companies. As the market is in a glut of oil supply, it has simultaneously raised the debt of the major oil companies.
More bad news
Oil companies have accumulated large amounts of debt and have recently been claimed as many credit rating agencies as a problem in the current markets. Exxon Mobile (NYSE:XOM) has been on the top of the list as the accumulated debts would be a major liability to pay off by the companies even after the moderately reviving market. Exxon immediately began to sell bonds in the company in order to ensure that the company is not downgraded by Moody’s.
One of the world’s largest credit rating agencies, Moody’s had ominously stated that the debt rate of Exxon would be onerous and the credit rating of the organization would be downgraded if the debt carried on in the same manner. Moody’s stated that the debt and limited cash flow of the oil market, would make it much tougher for oil companies to deliver on their debt. Exxon was mentioned in this list as no exemption to the rule. Earlier this week, the decision about this issue was almost immediately made in line with the Moody’s rating by Exxon.
A sector downgrade
The only potentially quick way to raise the credit rating for Exxon now, is to raise investor funds and ensure that the oil giant invests in acquisitions and mergers across the world. The first investor funding rounds through bonds could provide some transient relief to the companies and the ailing industry. Along with Moody’s, Standard and Poor’s, one of the biggest competitions to Moody’s as a credit rating agency, has also remarked on the troubled state of the industry and the several companies who could face imminent downgrading in their credit rating. Crude oil is speculated to fall by even further this year.