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Standard & Poor’s (S&P) has downgraded its oil price assumptions for 2016 and has unsurprisingly downgraded a number of oil producing states as a result. The axe fell for a number of sovereign credit ratings on 17 September. In the MENA region Saudi Arabia, Bahrain and Oman all suffered, but Qatar’s AA rating was reaffirmed. Kuwait, Qatar and Abu Dhabi have all had their ratings reaffirmed in recent days.
S&P revised its Brent price assumption for 2016 down from $55/B to $40/B last month, with a gradual increase to $50/B in 2018 and beyond, the first such revision since August when Brent averaged $48.21/B. It has since fallen below $30/B, a fall of more than 25%, although prices tentatively edged higher this week. Clearly the revised price assumption was needed, although arguably slightly on the conservative side with Brent futures currently averaging around $37/B in 2016. Nevertheless, the impact was swift.
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