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Worst has passed, says Credit Suisse

According to Swiss bank Credit Suisse, the worst is over for the oil industry.

Bill Featherstone, an oil analyst at the bank, recently wrote a research note indicating that the bottom has passed for the market and the long road to recovery had begun.

Urs Rohner, the bank’s chairman, also made some relatively upbeat comments in a half-hour interview with SRF, the state broadcaster in Switzerland. Credit Suisse has a high degree of engagement with the oil and gas industry, but Rohner played down the risk this presents to the bank, saying:

“Our oil and gas exposure is possibly a little bit bigger than other European banks. But seen in total, it is relatively small. That’s not something where I believe there’s a big reason to worry.”

Established oil majors like Shell and BP have relatively deep pockets and other downstream businesses, such as lubricant production, so they are expected to weather the challenging period ahead. Credit Suisse and other banks are apparently reviewing how they do business with the oil and gas market. For example, the US shale oil sector is thought to be heavily in debt, and many smaller operators may file for bankruptcy while the market rebalances.

With production levels coming down around the world, though, oil prices have stabilised in recent weeks. With a tighter market, oil companies can now focus on the challenges ahead, such as finding ways to operate efficiently and profitably in a low-price market while also protecting workers from the novel coronavirus.

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