A fourfold increase in energy companies’ debts since 2003 may have deepened last year’s oil-price rout as firms delayed curbing output and sold futures contracts to hedge against the slump, according to the Bank for International Settlements.
Energy companies’ outstanding debts rose to more than $800 billion this year from less than $200 billion in 2003, the Basel-based institution said in a report on Feb. 7. Sinking oil prices weakened the value of assets used as collateral by producers and compelled them to sell more of their output on futures markets, it said.
Brent crude oil, a global benchmark, fell 60 percent between June and January, as members of the Organization of Petroleum Exporting Countries refused to cut their own oil production in response to the highest U.S. output in three decades. The price has since rebounded more than 20 percent amid speculation that traders closed bearish bets and U.S. drillers idled the most oil rigs in a week ever.