S&P assesses the impact of oil and gas supply risks on non-financial companies in the Asia-Pacific region, finding that 15% may experience a deterioration in credit quality under worst-case scenarios

Rating agency Standard & Poor's conducted a scenario analysis on non-financial companies covered in half of the Asia-Pacific region, encompassing approximately 20 industries, testing potential supply chain disruptions, cost exposure to oil and gas and their derivatives, as well as the impacts of margin and liquidity pressures.

In the baseline scenario of "war quickly resolved," where Brent crude oil is priced at $85 per barrel for the remainder of this year and $70 next year, the proportion of companies facing deteriorating credit quality is 9%. In the scenario of prolonged conflict and energy shocks, where Brent crude oil is priced at $130 per barrel for the remainder of this year and $98 next year, that proportion rises to 15%. Both scenarios assume that the financing market remains operational and that Standard & Poor's does not take further negative sovereign rating actions.

The report indicates that approximately 80% of the companies rated in the Asia-Pacific region are investment grade. In the face of the immediate impacts of energy shocks, these companies possess good financial flexibility. However, if disruptions exceed the baseline scenario, the impact on credit quality in the coming months will be more pronounced