Communicator

Last year, global demand for loans in the oil sector decreased by 6%, but this doesn't imply a halt in investment. The debt-to-profit ratio of companies has shifted in favor of profits since 2020. Average oil and gas companies now generate more revenue than needed to cover capital expenditures through the end of the decade, potentially eliminating the need for loans. Major industry players like Chevron Corp. and Saudi Aramco are examples of this trend.

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This financial autonomy also impacts environmental efforts. Previously, bank loans could be leveraged to pressure companies into reducing extraction and emissions. Now, without such financial dependencies, companies have more control over their production volumes, which could delay global goals aimed at curbing the growth of hydrocarbon energy.

Source: Tim Quinson, 29^th Apr 2024, Bloomberg